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Telecommunications

Introduction

Currently, India is the world’s second-largest telecommunications market with a subscriber base of 1.16 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.

The liberal and reformist policies of the Government of India have been instrumental along with strong consumer demand in the rapid growth in the Indian telecom sector. The Government has enabled easy market access to telecom equipment and a fair and proactive regulatory framework, that has ensured availability of telecom services to consumer at affordable prices. The deregulation of Foreign Direct Investment (FDI) norms have made the sector one of the fastest growing and the top five employment opportunity generator in the country.

Market Size

India ranks as the world’s second largest market in terms of total internet users. The number of internet subscribers in the country increased at a CAGR of 45.74% during FY06–FY19 to reach 636.73 million in FY19. The internet subscribers reached 687.62 million by September 2019. Total wireless data usage in India grew 10.58% y-o-y to 19,838,886 terabytes between July-September 2019.

India is also the world’s second-largest telecommunications market. It’s total telephone subscriber base and tele-density reached 1,177.97 million and 87.37%, respectively, in FY20.

Gross revenue of the telecom sector stood at Rs 185,291 crore (US$ 26.51 billion) in FY20 (April-December 2019).

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.

Investment/Major Development

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 – March 2020 totalled US$ 37.27 billion according to the data released by Department for Promotion of Industry and Internal Trade (DPIIT).

Road Ahead

Revenue from the telecom equipment sector is expected to grow to US$ 26.38 billion by 2020. The number of internet subscribers in the country is expected to double by 2021 to 829 million and overall IP traffic is expected to grow four-fold at a CAGR of 30% by 2021. The Indian Government is planning to develop 100 smart city projects, and IoT will play a vital role in developing these cities. The National Digital Communications Policy 2018 envisaged attracting investment worth US$ 100 billion in the telecommunications sector by 2022. App downloads in India is expected to increase to 18.11 billion in 2018F and 37.21 billion in 2022F.

Note: Conversion rate used in April 2020, Rs 1 = US$ 0.013123

References: Media Reports and Press Releases, Cellular Operators Authority of India (COAI), Telecom Regulatory Authority of India (TRAI), Department of Telecommunication (DoT)Department for Promotion of Industry and Internal Trade (DPIIT), India Services Sector Report by Deloitte

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