Significant reforms in India's telecom business in 2021 should help restart the sector's growth and boost revenue. In light of the recent measures made by the union cabinet, the cash-strapped sector can breathe easier, which in turn will encourage investments to be made in 5G equipment. Additionally, the cabinet has greenlighted a PLI plan worth $1.62 billion for the telecom and networking equipment manufacturing sectors.
Estimated rise in smartphone users by 2026:
In 2021, there were 1.2 billion mobile users in India, with roughly 750 million of those people using smartphones. Our research indicates that by 2026, there will be one billion smartphone users worldwide. From 2021–2026, the rural sector is projected to expand at a compound annual growth rate (CAGR) of 6%, while the urban sector grows at a CAGR of 2.5%.
Mobile device Replacement:
Indian consumers' expectations keep rising, and the market is replacing them at a rather rapid clip. In the urban setting, a mobile device typically lasts for three years. Based on our research, we predict that by 2026, 95% of urban smartphone replacements would be for brand-new devices, while only 5% will be for used devices. Four years is an average lifespan of a mobile device, and this pattern is predicted to hold true for the rural population as well. In 2026, new gadgets are expected to account for around 80% of replacements, while used devices will account for about 20%. As the number of people who own smartphones increases, it's projected that the rate at which feature phones are being swapped out for smartphones will slow down. By 2026, the number of urbanites upgrading from feature phones, which totaled 72 million in 2021, will have reached 60 million. The rural sector's replacements will decrease from 71 million in 2021 to 60 million in 2026.
Effect of 5G on the revenue of Telecommunication Industry:
The global revenue forecast for 5G services as well as networks is looking bright, with a compound annual growth rate (CAGR) of 164% forecasted for the next five years and US$1.3 trillion in sales expected by 2030. The advent of 5G in India gives a massive chance to boost the Indian economy by an estimated US$450 billion. Another encouraging sign for the telecommunications industry is that India is expected to have 330 million plus 5G subscriptions by 2026.
Everyone in the Indian telecommunications industry is curious about one thing, though: will average revenue per user (ARPU) increase dramatically? This question’s answer is indeed a little complex.
There are a few obstacles that need to be overcome before Indian telecoms can reverse their declining revenues, according to early indications.
- The first is that the telcos want a 95% reduction in the TRAI-recommended 5G spectrum auction base price in India. In addition, telcos prefer a lengthy, phased payment plan for their spectrum allocation.
- The second problem telecom companies in India confront is the huge sums of money they will need to spend over the next five to six years to roll out 5G networks across the entire country. There has been speculation that it could cost between $7 billion and $10 billion.
- Thirdly, many carriers worry that the deployment of 5G in India could cause a pricing disruption by new or established competitors, causing ARPUs to plummet.
- Finally, telcos are doubtful about their ability to profitably implement 5G's more advanced use cases, such as real-time gaming, live streaming, driverless automobiles, or virtual reality, all of which are still several years away from widespread deployment in India.
It is expected that 5G service plans will cost roughly the same as 4G plans, or around Rs. 300 per month, in accordance with the telcos' stated goal of increasing average revenue per user. In this way, Indian telecommunications companies can hasten the uptake of 5G services and increase their subscriber base, and then, once the technology has a solidified user base and can support high-volume traffic, they can begin charging more for premium features.
Given 5G's tendency for delivering high-quality services like lower latency, augmented reality applications, network slicing, etc., Indian telecom carriers can initially seek revenues from enterprise firms and industries. In spite of the fact that 4G is expected to continue meeting the needs of the vast majority of Indians for the foreseeable future (at least another six to seven years), there is an argument to be made for profiting from 5G-ready industries such as smart cities and surveillance, manufacturing, education, government utilities, as well as healthcare.
Over the years 2022 to 2026, the nation's cumulative smartphone sales are projected to equal 1.7 billion, generating a market worth about $250 billion, of which around 840 million devices compatible with 5G network are anticipated to be sold in that time. Sales of 5G smartphones will rise in India starting in 2022 as 5G adoption increases year over year. Given the development of the digital ecosystem and the industry's attempts to release reasonably priced 5G handsets, the 3G mobile network will gradually be phased out.
India will become the second-largest smartphone market in the world over the next five years as a result of the newly announced $10 billion incentive package to promote semiconductor manufacture in the nation.
Recent budget announcements indicate that the government actively supports the Bharat Net initiative. Through public-private partnerships, the initiative will connect rural areas up to the final mile (to fund about 65 percent of the total project cost). Approximately 2.5 million gramme panchayats are expected to be connected as part of this programme. The government has also pledged to fiberize rural and isolated areas by 2025. These programmes are certain to increase smartphone sales in rural areas.