India is a mobile data powerhouse, ranking second globally in mobile broadband internet traffic. The telecommunications industry is a diverse sector encompassing infrastructure, equipment, mobile virtual network operators, spectrum usage, 5G technology, telephone service providers, and broadband. The number of telephone connections has grown significantly, reaching 1.2 billion in April 2024, reflecting a nearly 29% increase over the past decade. Mobile number portability (MNP) remains active, with over 11 million requests submitted in April 2024.
Historical background
The Indian telecom industry began with state-controlled telegraph services in the 19th century. The sector evolved dramatically following the liberalization policies of the 1990s. The National Telecom Policy of 1994 marked a turning point by opening the market to private investment, fostering rapid technological advancement and competitive innovation.
Duopoly in the market
Reliance Jio and Bharti Airtel controls a near-duopoly in the Indian telecom market. As of December 2023, Jio has 459.81 million subscribers, while Airtel follows with 257.37 million. Vodafone Idea and BSNL trail significantly, with 127.28 million and 21.28 million subscribers, respectively.
Tariff hikes
In recent developments, both Jio and Airtel have implemented tariff hikes ranging from 10-15% to boost Average Revenue Per User (ARPU) and support extensive investments required for 5G deployment. This strategic move has raised their ARPU to approximately ₹200, strengthening their financial positions and enabling further network enhancements.
5G and its impact
The rollout of 5G networks by Jio and Airtel marks a significant milestone. Jio, with its standalone 5G architecture, and Airtel, with a non-standalone setup, have aggressively expanded their 5G footprints. By the end of 2023, the split of 5G users was 60:40 in favour of Jio. The introduction of 5G has improved mobile broadband services and set the stage for advanced applications such as ultra-reliable low-latency communications and massive machine-type communications. Wireless data usage in India reached 47,629 PB in September 2023, reflecting a 5.9% increase from June 2023.
Market penetration
Reliance Jio continues to lead in market penetration by leveraging its comprehensive network and competitive pricing. Domestically, Jio aims to expand its fixed wireless access (FWA) services to 200 million homes. Internationally, Jio’s partnership with SES to launch Jio Space Technology Limited aims to provide affordable broadband services through satellite technology, underscoring Jio’s ambition to extend its influence beyond Indian shores and tap into global markets.
Indian telecom vs. global market
The Indian telecom market is unique for its low data costs and high consumption rates. Indian consumers benefit from some of the lowest data prices globally, paired with one of the highest data consumption rates. This contrasts with markets like the United States and Europe, where data costs are significantly higher, and consumption rates are lower. India’s advanced telecom infrastructure and widespread adoption of digital services make it a hotspot for telecom innovations and investments.
Revenue and expenses
Indian telecom companies derive their revenues primarily from voice and data services, enterprise solutions, and digital services. However, the sector faces substantial expenses, including spectrum acquisition, network maintenance, and technology upgrades. The latest spectrum auctions saw Jio and Airtel making significant investments to bolster their 5G capabilities, highlighting their commitment to maintaining a competitive edge.
ARPU and financial health
The ARPU for Indian telecom companies has shown steady improvement due to recent tariff hikes. Jio and Airtel now have an ARPU of around ₹200, reflecting strong monetization strategies and customer base management. In contrast, Vodafone Idea continues to struggle with an ARPU of approximately ₹130, highlighting its financial challenges and the competitive pressures it faces.
Existing players
Reliance Jio and Bharti Airtel remain the dominant players, with Vodafone Idea and BSNL trailing. Due to Vi’s continuous financial difficulties, which have hampered its efforts to roll out 5G, the government has decided to invest in the company to support its sustainability. This intervention draws attention to the difficulties smaller players face in a market dominated by two giants.
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