Home
Telecom
Telecom Features
What to Expect From the Indian Telecom Industry in 2018

What to Expect From the Indian Telecom Industry in 2018

By Press Trust of India | Updated: 1 January 2018 17:25 IST

Highlights

Around Rs. 3 lakh crores is expected to be invested in the sector
Number of major players have reduced to just three
Investment in new technologies will boost job prospects

Mobile data consumption in India surpassed the combined usage of the US and China in 2017, a year that saw the landscape of the telecom sector being altered with bitter competition and setting-in of the much awaited consolidation phase.

With latent demand for data fuelling the digital economy, 2018 could be the growth year for the sector where investment of around Rs. 3 lakh crore is estimated to be made in next two years.

In what could be considered as a transformational year for the Indian telecom sector, 2017 saw telcos consolidate like never before, leaving just three major players in the market by the end of the year. It only proved that telecom sector has become a money guzzler where only those with deep pockets can survive.

While the mighty house of Tatas gifted away their telecom business to Bharti Airtel, billionaire Mukesh Ambani's Reliance Jio acquired spectrum, mobile-phone towers and fibre assets of his brother Anil Ambani's Reliance Communications Ltd.

On the other hand, Vodafone India and Idea decided to merge to become the country's largest operator. Airtel bought Telenor's ailing Indian subsidiary, Telenor India, as also Tikona Digital Network.

"This year was of consolidation for the sector. Next year will be a year of growth for the sector," Telecom Secretary Aruna Sundararajan told PTI summing up the macro scenario of the sector for 2017 and 2018.

And what a year it has been! The Indian telecom sector, -- second only to China with its massive subscriber base of 1.1 billion users -- saw severe bloodletting for most part of the year as free voice calls and dirt cheap data ushered in by Reliance Jio reined in tariffs, cheering consumers.

Jio propelled India to the top position in terms of mobile data consumption with 150 crore gigabytes per month, surpassing the combined 130 crore gigabytes mobile data consumption of the US and China.

The competition forced market consolidation as nervous, smaller players bailed out and biggies joined hands to cement their position. Consolidation led to fewer players and fewer jobs.

"With consolidation and the poor financial health of the sector, the telcos are being forced to cut their staff strengths significantly. We expect that around a third of the four million employed directly and indirectly by the sector will be out of a job," industry body COAI's Director General Rajan S Mathews said.

That said, once the consolidation concludes, telcos may be better placed to invest in new technologies and recruit skilled hands, boosting job prospects.

For years, Airtel has enjoyed pole position in the market, but that pecking order will change soon as Vodafone- Idea combine will have over 400 million subscribers by next year.

Embattled Reliance Communications (RCom) completed merger of Sistema Shyam mobile business with it but failed to proceed with the merger deal with Aircel. RCom announced the closure of voice business, and Aircel is closing services in six circles.

"With consolidation, the telcos will get the benefit of synergy amongst their operations and the overall cost of operations are likely to come down, leading to increased margins," Mathews said, adding that the pricing power of companies could return enabling longer-term sustainability.

The year 2017 saw Idea and RCom reporting their first-ever consolidated loss (for the quarter ended December 2016), and Bharti Airtel sustaining steep fall in profits. The telcos blamed Jio's free offers for the haemorrhage.

Mathews says fundamental changes would be critical for the sector. The industry, he estimates, will require an investment of Rs 3 lakh crores in coming years for innovation and infrastructure expansion.

The government is finalising relief package for the sector which includes proposal to give more time to telcos to make spectrum payments.

These measures are based on recommendation of an inter-ministerial committee and are expected to materialise by early 2018 along with a new National Telecom Policy -- both could prove to be a lifeline for the industry. Or, at the very least, offer a breather to players saddled with loans.

"The industry is still struggling with a massive cumulative debt of around Rs 4.6 lakh crore, while revenues have fallen to under Rs 1.8 lakh crore," Mathews noted. As it is, the telecom operators are yet to recover fully from the past upheavals (remember 2009 when new entrants triggered a voice tariff war and later the spectrum auction added to the industry's woes).

A new frontier is just about opening in the 2G case with the recent acquittals by the special court prompting some players, whose licenses were cancelled in 2012, to weigh legal options.

As the financial and legal narrative unfolds in the telecom sector, some experts feel that mobile rates may actually inch up in 2018.

"The telcos will move to innovative business models to counter the falling revenues. Converged services with voice telephony, wired and wireless broadband, and television services along with content, Internet of Things, financial payments, are likely to help in better revenue streams," Deloitte Haskins and Sells LLP, Partner, Hemant Joshi said.

The year saw India leapfrogging from 135th position in broadband usage to wrest the numero uno slot as data-hungry Indians devoured newer, cheaper offers. That demand for data is likely to continue unabated next year too.

While the industry gravitated towards Internet-based technology, the Telecom Regulatory Authority of India cut mobile call connection charges and announced that the rates will be made nil by 2020. The move is being seen as a step to encourage making phone calls using internet protocol.

The regulator also stood firm on its stand to keep Internet open, even as the US rolled back net neutrality regulations. Other regulatory moves including tightening call quality norms and proposal to ease spectrum caps will continue to play out in the market in 2018.

Another area to watch out would access of satellite phone services for consumers especially during air travel. India's telecom sector is also expected to make significant progress for deployment of 5G services in 2018.

With Internet of Things, Artificial Intelligence, drones and robots promising to fuel future demand for high-speed data, it may just be a matter of time before the industry -- with fewer players -- returns to its trademark growth.

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.