Indian Telecom Sector in 2017: Our Forecast of Key Trends
- Data realization per MB to continue to fall and decrease by 20–25 percent in 2017. The Jio pre-launch unleashed a price war on mobile data in India. Consequently, telcos will experience reduced data realization in 2017 as the increase in data traffic will not compensate for reduction in data revenues. Telcos will have no choice but to accelerate the transformation of their delivery model toward a low-cost-per-MB model, leading to large cost-efficiency initiatives and optimization of their 2G/3G/4G networks.
- Acceleration of fiberization in India. Data price reduction, along with a consequent surge in data demand, will accelerate focus on fiber deployment. Poor fiber infrastructure is a bottleneck in providing cheap data services in India. With less than 20 percent of towers fiberized, India has a lot of ground to cover. We forecast a strong acceleration of the fiberization of networks in 2017.
- Market to witness very affordable LTE- and VoLTE-compliant smartphones in 2017. With its LYF smartphones, Jio has been a game changer both in terms of reduced price points and LTE and VoLTE compliance across models. We expect other players to follow suit and further reduce price points so that LTE and VoLTE become default features. Such smartphones will also have a market demand pull on the back of reduced data prices expected in 2017.
- GST-related tax impact on telcos expected to be minimal but telcos to face significant compliance costs in the new GST regime. Output tax will increase and will be offset to a large extent by input tax credits and supply chain efficiencies. However, GST compliance costs related to multiple state registrations will be a significant burden on telcos.
- Mobile advertising to be a key talking point but traditional advertising to continue to get lion's share. The industry is predicting 30+ percent growth in mobile Internet users from the existing nearly 370-million user base. A recent survey shows that these users are spending nearly 70 percent of their time online. This finding, coupled with predictions on smartphone growth and lower data charges, indicates that mobile advertising will attract attention. Nevertheless, the traditional advertising media of print and broadcast will continue to dominate, accounting for nearly 90 percent of advertising spends.
Indian Telecom in 2017 – Top Wish
Explosion in the adoption of digital services like payments, e-governance, and entertainment enabled by huge investments in mobile data networks.
Indian Telecom in 2016 – Top Wish – Still Work in Progress
While work on the BharatNet (NOFN) project is ongoing, more traction is required.
Where Do We Stand Now?
Jio has been an accelerating factor in the consolidation of the Indian market, with announcements related to intra-circle roaming (ICR) agreements, site-sharing agreements, and intended exit being indicators of the expected level of sector consolidation.
Telco efforts were uniformly focused on increasing coverage and capacity building of their network.
2016 saw primarily non-telcos (OTT players) capturing the lion's share of customer spend in the areas of m-wallets, e-commerce, and mobile entertainment.
Several announcements by OEMs related to customer network usage-based analytics; packet probing and advertisement content-based offerings were made in 2016, but on-ground materialization is still in progress.
A lot of regulatory deliberations happened in 2016 on mandating specific call quality parameters, but until now, no mechanism to implement the same has been agreed upon by the regulator and the industry.