Monthly data consumption per smartphone is estimated to grow nearly five times from 3.9 gigabyte (GB) in 2017 to 18 GB by 2023
"What is coming is better than what is gone," goes a saying which aptly describes the mood of the telecom industry in 2018.
High competition, declining tariffs and pressure on financials marked the year gone by and the industry is looking forward to a stabilised market where three players -- Bharti Airtel, Reliance Jio, Vodafone-Idea combine -- will emerge as conquerors.
Experts said that this year the competition will ease and tariffs will go on an upward trajectory, ultimately improving revenues of the players which had been on a decline since the entry of Mukesh Ambani-run Reliance Jio.
The fallout of 2017 was consolidation in the industry that forced smaller players such as Telenor, Sistema, Tata Teleservices, Videocon to exit the market. Even two big players Vodafone and Idea Cellular decided to merge their operations, while RJio decided to buy out the wireless assets of Reliance Communications. The industry is reeling under a combined debt of about Rs 4.5 lakh crore.
RJio, with its free voice calls and cheap data tariffs, triggered an exponential growth in data usage and consumption by mobile users. However, out of 1 billion mobile users, only 400-500 million are internet users and this is a market that holds a huge potential for the operators. The entry of Reliance Jio also started a price war among telecom players where consumers became the king, enjoying the unlimited data offers along with free voice. This led to manifold increase in data consumption.
"We expect pricing power will return gradually as Jio's subscriber base reaches around 200 million (from 139 million in September 2017) and revenue market share rises to around 15% towards end-2018," Fitch Ratings said in a note on the outlook for 2018.
The competition will ease as three large telcos have emerged out of the industry shakeout; their combined revenue market share (RMS) will increase to around 90% in 2018 compared with 80% in 2017, the note said.
Similar views have been expressed by other analysts. A note by Morgan Stanley said the industry consolidation should help pricing power for RIL's telecom business, which was seen in the two recently-announced tariff plans which raised effective prices by about 20%.
Data growth:
A growth of about 58% has been recorded in broadband subscribers, which mainly include mobile internet users. As per latest available data from Telecom Regulatory Authority of India, the number of broadband users stood at 340.26 million at the end of October 31, 2017, against 218.42 million at the end of October 31, 2016.
As per a recent report by Ericsson, the monthly data consumption on every smartphone in India is estimated to grow nearly five times from 3.9 gigabyte (GB) in 2017 to 18 GB by 2023. Also, the total mobile data traffic per month in India is expected to grow 11 times during the forecast period (2017- 2023) from 1.3 EB (exabytes) to 14 EB by 2023.
Led by a surge in data consumption in India, global mobile data usage witnessed highest year-on-year growth since 2013. India jumped to the top spot in data usage in a period of one year after Reliance Jio launched its 4G (LTE) services.
Subsequently, all operators including Bharti Airtel, Vodafone, Idea Cellular have announced plans to launch 4G services. It is expected that LTE will be the dominant technology in India by 2023.
LTE will account for over 60% of the total subscriptions in the country by 2023 compared to the 12% LTE subscriptions in 2017 and there will be around 800 million VoLTE (voice over 4G) subscribers in India by 2023.
Nitin Soni of Fitch Ratings said cash flow from operations will improve along with blended tariff as competition eases. "The declining trend in revenue and Ebitda (earnings before interest, taxes, depreciation and amortisation) will reverse in 2018. Average blended tariff to grow by 3-4% from the lows of around Rs 145 as RJio may gradually discontinue promotions and discounts. Cash flow from operations will benefit from lower competition and growing data consumption."
After a decline in 2017, the industry revenue will grow by around mid-single-digit percentage this year, driven mainly by increased data consumption and higher blended tariffs.
"Data traffic could continue to grow by 50-60% in 2018 as cheaper 4G smartphones proliferate. The industry will continue to add at least 5-6 million smartphones each month," according to Fitch Ratings.
Data will be the focus for both telecom players and consumers in 2018.
TIME TO ENTRENCH
- Monthly data consumption per smartphone is estimated to grow nearly five times from 3.9 gigabyte (GB) in 2017 to 18 GB by 2023
- Total mobile data traffic per month is expected to grow 11 times during the forecast period (2017- 2023) from 1.3 EB (exabytes) to 14 EB by 2023
- All operators including Bharti Airtel, Vodafone, Idea Cellular have announced plans to launch 4G services. It is expected that LTE will be the dominant technology in India by 2023.
- LTE will account for over 60% of the total subscriptions in the country by 2023 compared to the 12% LTE subscriptions in 2017 and there will be around 800 million VoLTE (voice over 4G) subscribers in India by 2023
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