Perspectives on India's Telecom Industry

Introduction

As of 2021, India has 82.53 crores internet users second only to China which has close to 99 crores subscribers. And yet, it represents only 61% of India's population (wiki)- which underlines the growth potential of India's telecom industry. Developed countries like the United States have an internet usage rate of 95.5% of the total population.

As per TRAI's press release of 30th June 2021, there are a total of 1202.56 million subscriptions in India and the breakup is shown below:

         

The chart below shows that the proportion of wire-line subscriptions has been moderating over the years.

In terms of tele-density which measures the number of subscriptions for every hundred individuals living in an area the total density for India as of June 30 2021 as per TRAI is 88.07%. Again the more interesting aspect to note is that Urban India has a tele-density of 140.86% whereas rural India has a tele-density of 60.10%. So the potential for growth in rural India is very high.

Reliance Jio's Impact

No discussion on India's Telecom Industry is complete without highlighting the impact of Reliance Jio on data usage in India. The chart below gives you an idea of the impact of the debut of Reliance Jio in 2016 on mobile data usage.

This is nothing short of spectacular - we have a new ivy-league case study from India - The Disruption of Indian Telecom Industry by Reliance Jio.

The impact of data usage on other sectors such as banking, payments, e-commerce, governance etc and Indian economy in general is phenomenal. By 2025 data usage is expected to reach around 25 GB per month per user propelling the economy into a truly 'mobile-first' digital landscape.

Industry Reeling under Jio's Pressure

While consumers and other complementary sectors have immensely benefited from Jio's entry the telecom industry itself is in doldrums. Ten telecom players have gone out of business and two big players have merged due to Jio's onslaught.The chart below shows the precarious position of major telecom players in India apart from Jio.


While BSNL/MTNL are causing losses of more than Rs10,000 crores per annum to the national exchequer, Vodafone Idea and Bharti Airtel are reeling under heavy losses. Jio Platforms ltd which is the telecom and digital services arm of RIL, amassed more than 42 crores subscribers with an EBITDA of Rs34,035 crores for the year ending on Mar 31, 2021.

References:

1. https://www.trai.gov.in/notifications/press-release

2. https://timesofindia.indiatimes.com/business/india-business/how-long-will-telcos-kill-each-other-sunil-mittal/articleshow/84054345.cms

3. https://finance.yahoo.com/quote/IDEA.BO/financials?p=IDEA.BO

4. Annual Reports of Various Companies

to be continued...

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