Telecom Services : The Saving Grace During Pandemic


By MYBRANDBOOK


Telecom Services :  The Saving Grace During Pandemic

Though the deadly Covid virus almost paralyzed the entire globe including India, telecommunications was the only industry that could help other industries including the most critical one – healthcare – moving during the pandemic

 

The year 2020 began with a rather horrific note – the outbreak of Covid-19 – and it engulfed every aspect of human life – health and wellness, economy, businesses, lifestyle and above all human lives. Restrictions on movement were placed across the globe – travel through any means was stopped or curbed, movement of goods were put on hold. Lockdowns across the world commanded human beings to stay in-house. Millions of lives lost to the deadly virus and trillions of economic losses reported across the globe.
While people had to stay put in their homes and did not venture out, the only saving grace for them was the availability of telecommunication services that allowed them to get their essential items – food, medicines etc – at the doorstep through the home delivery mechanisms placed by many merchants. Similarly, the confined population glued on to the internet to get their quota of entertainment.
Currently, India is the world’s second-largest telecommunications market with a subscriber base of 1.2 billion and has registered strong growth in the last decade. The Indian mobile economy is growing rapidly and will contribute substantially to India’s Gross Domestic Product (GDP) according to a report prepared by GSM Association (GSMA) in collaboration with Boston Consulting Group (BCG). In 2019, India surpassed the US to become the second largest market in terms of number of app downloads. 
At the end of December, 2020, the gross revenue of the telecom sector stood at Rs. 68,228 crore (US$ 9.35 billion). Over the next five years, rise in mobile-phone penetration and decline in data costs will add 500 million new internet users in India, creating opportunities for new businesses.


 
Market Size

The number of telephone subscribers in India increased from 1,177.97 million at the end of March-20 to 1,201.20 million at the end of March-21, thereby showing an annual growth of almost 2%. Urban telephone subscription increased from 657.72 million at the end of February-21 to 663.77 million at the end of March-21 and the rural subscription also increased from 530.18 million to 537.42 million during the same period. The monthly growth rates of urban and rural telephone subscription were 0.92% and 1.37% respectively during the month of March-21.


The overall Tele-density in India increased from 87.26 at the end of February-21 to 88.17 at the end of March-21. The Urban Tele-density increased from 139.96 at the end of February-21 to 141.03 at the end of March-21 and Rural Tele-density also increased from 59.48 to 60.27 during the same period. The share of urban and rural subscribers in total number of telephone subscribers at the end of March-21 was 55.26% and 44.74% respectively.


Wireless Subscribers: Total wireless subscribers increased from 1,167.71 million at the end of February-21 to 1,180.96 million at the end of March-21, thereby registering a monthly growth rate of 1.13%. Wireless subscription in urban areas increased from 639.24 million at the end of February-21 to 645.20 million at the end of March-21 and wireless subscription in rural areas also increased from 528.47 million to 535.75 million during the same period. Monthly growth rates of urban and rural wireless subscription were 0.93% and 1.38% respectively.


The Wireless Tele-density in increased from 85.78 at the end of February-21 to 86.68 at the end of March-21. The Urban Wireless Tele-density increased from 136.03 at the end of February-21 to 137.08 at the end of March-21 and Rural Tele-density also increased from 59.28 to 60.08 during the same period. The share of urban and rural wireless subscribers in total number of wireless subscribers was 54.63% and 45.37% respectively at the end of March-21.
As on 31st March, 2021, the private access service providers held 89.68% market share of the wireless subscribers whereas BSNL and MTNL, the two PSU access service providers, had a market share of only 10.32%.

 

Wireline Subscribers: Wireline subscribers increased from 20.19 million at the end of February-21 to 20.24 million at the end of March-21. Net increase in the wireline subscriber base was 0.05 million with a monthly growth rate of 0.26%. The share of urban and rural subscribers in total wireline subscribers were 91.76% and 8.24% respectively at the end of March, 2021.
The Overall Wireline Tele-density increased from 1.48% at the end of February-21 to 1.49% at the end of March-21. Urban and Rural Wireline Tele-density were 3.95% and 0.19% respectively during the same period. BSNL and MTNL, the two PSU access service providers, held 47.20% of the wireline market share as on 31st March, 2021.

 

Broadband Subscribers : As of March, 2021, the number of broadband subscribers increased from 765.09 million at the end of February-21 to 778.09 million at the end of March-21 with a monthly growth rate of 1.70%.
Top five service providers constituted 98.82% market share of the total broadband subscribers at the end of March-21. These service providers were Reliance Jio Infocomm Ltd (425.51 million), Bharti Airtel (191.93 million), Vodafone Idea (123.61 million), BSNL (26.04 million) and Atria Convergence (1.85 million).


As on 31st March, 2021, the top five Wired Broadband Service providers were BSNL (6.82 million), Bharti Airtel (3.09 million), Reliance Jio Infocomm Ltd (2.60 million), Atria Convergence Technologies (1.85 million) and Hathway Cable & Datacom (1.07 million).
As on 31st March, 2021, the top five Wireless Broadband Service providers were Reliance Jio Infocom Ltd (422.92 million), Bharti Airtel (188.84 million), 

Vodafone Idea (123.60 million), BSNL (19.22 million) and Tikona Infinet Ltd. (0.32 million).

Major Developments
With daily increasing subscriber base, there have been a lot of investment and development in the sector. FDI inflow into the telecom sector during April 2000 – December 2020 total US$ 37.62 billion according to the data released by Department for Promotion of Industry and Internal Trade (DPIIT).


Some of the developments in the recent past are:
•    In April 2021, Elon Musk’s SpaceX has started accepting pre-orders for the beta version of its Starlink satellite internet service in India for a fully refundable deposit of US$ 99. Currently, Department of Telecommunications (DoT) is screening the move and more developments will be unveiled soon.


•    In March 2021, Vodafone Idea Ltd. (VIL) announced that the acquired spectrum in five circles would help improve 4G coverage and bandwidth, allowing it to offer ‘superior digital experience’ to customers.


•    In March 2021, Advanced Television Systems Committee (ATSC) and Telecommunications Standards Development Society, India (TSDSI) signed a deal to boost adoption of ATSC standards in India in order to make broadcast services available on mobile devices. This allows the TSDSI to follow ATSC standards, fostering global digital broadcasting standard harmonisation.


•    In December 2020, BSNL, in partnership with Skylotech India, announced a breakthrough in satellite-based NB-IoT (Narrowband-Internet of Things) for fishermen, farmers, construction, mining and logistics enterprises.


•    In the first quarter of FY21, customer spending on telecom services increased 16.6% y-o-y, with over three-fourths spent on data services. This spike in consumer spending came despite of the COVID-19 disruption and lack of access of offline recharges for a few weeks


•    India had over 500 million active internet users (accessed Internet in the last one month) as of May 2020.


 •    In June 2020, Jio Platforms Ltd. sold 22.38% stake worth Rs 1.04 trillion (US$ 14.75 billion) to ten global investors in a span of eight weeks under separate deals, involving Facebook, Silver Lake, Vista, General Atlantic, Mubadala, Abu Dhabi Investment Authority (ADIA), TPG Capital and L. Catterton. This is the largest continuous fundraise by any company in the world.

 

Government Initiatives
The Government has fast-tracked reforms in the telecom sector and continues to be proactive in providing room for growth for telecom companies. Some of the key initiatives taken by the Government are as follows:


•    The Rs. 12,195 crore (US$ 1.65 billion) production-linked incentive (PLI) scheme or telecome is expected to bring in investment of around Rs. 3,000 crore (US$ 400.08 million) and generate huge direct and indirect employment.


•    In April 2021, the government pointed out that firms such as Ericsson and Nokia are now eager to expand their operations in India, and global companies like Samsung, Cisco, Ciena and Foxconn have expressed interest to set up their manufacturing base in the country for telecom and networking products.


•    In March 2021, TEPC (Telecom Equipment Export Promotion Council) organised India Telecom 2021—a platform for convergence of technologies and business exchange.


•    The Union Cabinet approved Rs. 12,195 crore (US$ 1.65 billion) production-linked incentive (PLI) scheme for telecom & networking products under the Department of Telecom.


•    In 2021-22, the Department of Telecommunications has been allocated Rs. 58,737.00 crore (US$ 8 billion). 56% allocation is towards revenue expenditure and the remaining 44% is towards capital expenditure.


•    Under Union Budget 2021-22, the government allocated Rs. 14,200 crore (US$ 1.9 billion) for telecom infrastructure that entails completion of optical fibre cable-based network for Defence services, rolling out broadband in 2.2 lakh panchayats and improving mobile services in the North East.


•    On January 15, 2021, India and Japan signed an MoU to enhance cooperation in the field of Information and Communications Technologies. The MoU was signed between the Union Minister for Communications, Electronics and IT, Ravi Shankar Prasad, and the Japanese Minister for Internal Affairs and Communications, Takeda Ryota.


•    On January 6, 2021, the Department of Telecommunications (DoT) issued Notice Inviting Applications (NIA) for auction of Spectrum in 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz bands. Last date for submission of applications for participation in the auction was February 5, 2021, and auction to commence online from March 1, 2021.


•    In December 2020, the Union Cabinet, chaired by the Prime Minister, Mr. Narendra Modi, approved a proposal by Department of Telecommunications for setting up of Public Wi-Fi Networks by Public Data Office Aggregators (PDOAs) to provide public Wi-Fi services through Public Data Offices (PDOs).


•    In December 2020, the Union Cabinet, chaired by the Prime Minister, Mr. Narendra Modi, approved the provision of submarine optical fibre cable connectivity between Mainland (Kochi) and Lakshadweep Islands (KLI Project).


•    On November 4, 2020, The Union Cabinet, chaired by the Prime Minister, Mr. Narendra Modi, approved to sign a Memorandum of Understanding (MoU) between the Ministry of Communication and Information Technology and the Department of Digital, Culture, Media and Sports (DCMS) of United Kingdom Government on cooperation in the field of telecommunications/information and communication technologies (ICTs).


•    On September 21, 2020, Prime Minister, Mr. Narendra Modi launched a project to connect all 45,945 villages in Bihar with optical fibre internet service. This project completed by March 31, 2021 at a cost of Rs. ~1,000 crore (US$ 135.97 million); Rs. 640 crore (US$ 87.01 million) of capital expenditure will be funded by Department of Telecommunications.


•    In March 2020, the government approved the Production Incentive Scheme (PLI) for Large- scale Electronics Manufacturing. The scheme proposes production-linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components including Assembly, Testing, Marking and Packaging (ATMP) units.


 •    FDI cap in the telecom sector has been increased to 100% from 74%; out of 100%, 49% will be done through the automatic route and the rest will be done through the FIPB approval route. FDI of up to 100% is permitted for infrastructure providers offering dark fibre, electronic mail and voice mail.

 

Road Ahead
Though the FY20-21 was marred by the Covid pandemic, and the world is still reeling under the havoc of the deadly virus, it is expected that the trends that were prevalent in 2020 would continue to hold good in the next couple of years. As Covid is a contagious disease, it was advised to avail contactless services as much as possible. This led to growth of home delivery services, work from home (WFH) and digital financial services.


Moving on to 2021, revenue from the telecom equipment sector is expected to grow to US$ 36 billion by 2021 on account of the PLI scheme launched by the Government. The number of internet subscribers in the country is expected to reach 900 million and overall IP traffic is expected to grow four-fold at a CAGR of 30% by end of 2021.


It is also expected that in 2021, 5G services would be made available in the country. Trail spectrum has been offered to all three operators – Bharti Airtel, Reliance Jio and Vodafone Idea – the first two operators have already launched 5G trial services in pockets. They are eyeing the 5G spectrum auction which is expected in the second quarter of 2021. It is expected once the spectrum are available, operators will be rolling out plethora of services including that for healthcare, manufacturing, education, mining and IoT using 5G services
 

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