The Deloitte TMT Predictions 2022 represents the world we live in today and the future to come. It examines COVID-19's role as a catalyst for a number of emerging telecom trends, stressing the lockdown-driven expansion of console gaming, streaming video services, health and wellness technologies, advanced connectivity for both enterprises and households etc. This year's predictions also throw light on the upcoming opportunities in the telecom sector like non-fungible tokens (NFTs), floating solar panels (floatovoltaics) to expand the renewable energy mix, Innovative wearable technology in healthcare, tech-assisted mental well-being solutions and sustainable smartphones. The Deloitte TMT Predictions 2022 also feature five-year estimates for India's smartphone boom along with the impact of 5G, highlighting the expected rise that India will witness in smartphone sales due to increased 5G penetration.
The Indian telecom sector has seen some major changes in 2021 that promise to reset the growth trajectory and generate revenues for the industry. The recent measures proposed by the union cabinet have provided respite to the cash-strapped sector, encouraging investments in 5G equipment. The cabinet also approved a $1.62 billion (roughly Rs. 12,600 crore) PLI scheme for the telecommunications and network equipment manufacturing industries.
India poised to have 1 billion smartphone users in the next five years
In 2021, India had 1.2 billion mobile customers, with around 750 million using smartphones. According to our research, the smartphone market will reach one billion users by 2026. From 2021 to 2026, this growth is likely to be propelled by the rural sector at a CAGR of six percent, while the urban sector is expected to grow at a CAGR of 2.5 percent. Higher Internet adoption is expected to fuel demand for smartphones; this increased demand will be propelled by the need to adopt fintech, e-health, and e-learning.
New smartphones will account for 95 percent of all smartphone replacements in the urban market in the coming five years
As consumer demands in India continue to climb, the market has demonstrated a rather rapid replacement rate. In the urban sector, the average lifespan of a mobile device is three years. According to Deloitte's estimate, 95 percent replacements in the urban market in 2026 will be toward new smartphones, while only five percent toward pre-owned phones compared with 75 percent and 25 percent, respectively, in 2021. The rural population is expected to demonstrate a similar trend where the average lifespan of a phone is four years. About 80 percent replacements are likely to be for new devices, while 20 percent for pre-owned ones in 2026. As the number of smartphone users grows, it is projected that the replacement of feature phones with smartphones would eventually decrease.
5G is believed to become the fastest-adopted mobile technology
According to Deloitte's analysis, demand for smartphones in India is expected to increase at a CAGR of six percent, to reach about 400 million smartphones in 2026 from 300 million in 2021. This high demand is likely to be primarily created after the launch of 5G, which will alone contribute 80 percent of the devices (about 310 million units) by 2026. 5G is believed to become the fastest-adopted mobile technology due its diverse applications, such as high-speed gaming and remote healthcare. After the launch of 5G, additional shipments of smartphones are expected to be 135 million (cumulative) by 2026.
India's smartphone revolution is likely to generate a predicted total cumulative shipment of 1.7 billion smartphones over 2022-2026, creating a market worth around $250 billion (roughly Rs. 19,39,700 crore), of which over 840 million 5G handsets are likely to be sold over the next five years. From 2022, 5G penetration will increase year on year, resulting in an increase of 5G smartphone sales in India. Also, the newly announced $10 billion (roughly Rs. 77,600 crore) incentive plan to boost semiconductor manufacturing in India and governments strong support for the BharatNet initiative in recent budget releases to fiberise rural and isolated areas by 2025 are guaranteed to boost smartphones sales in India.
The author is a Partner and Telecom Sector Leader at Deloitte India.
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