India is currently the world’s second-largest telecommunications market with a subscriber base of 1.20 billion and has registered strong growth in the past decade and a half.
Contribution of mobile phone industry as a part of gross domestic product (GDP) of the country in 2014 has been to the tune of US$ 400 billion.
According to a report prepared by the Groupe Speciale Mobile Association (GSMA), as of January 2019, India has witnessed a 165% growth in app downloads in the past two years.
Based on the data available from GSMA, this sector will create close to 4 million additional jobs by 2020.
Tele-density of Indian telecom industry (wireless plus wire line) has grown from a low of 3.60% in March 2001 to 84% in March 2016.
Telecom is the second highest revenue earner for the government, after income tax: The sector is expected to contribute as much as 90% of the government’s non-tax revenue. Digital India programme is also almost completely dependent on the telecom sector.
The liberal and reformist policies of the Government of India have been instrumental along with strong consumer demand in the rapid growth in the Indian telecom sector. The deregulation of Foreign Direct Investment (FDI) norms has made the sector one of the fastest growing and a top five employment opportunity generator in the country.
Issues and Challenges of Telecom Sector
High Right-of-Way (ROW) cost: Sometimes, state governments charge a huge amount for permitting the laying of fiber, etc.
Lack of fixed line penetration: India has very little penetration of fixed-line in its network whereas most of the developed countries have a very high penetration of fixed lines (telephone line that traveled through a metal wire or optical fiber as part of a nationwide telephone network).
Only around 25% of Towers in India are connected with fibre networks, whereas in developed nations, it is in excess of 70%.
5G Network requires towers to be connected to with very high-speed systems. Those high speeds are not possible on the present radio systems.
Declining Average Revenue Per User (ARPU): ARPU decline now is sharp and steady, which, combined with falling profits and in some cases serious losses, is prompting the Indian telecom industry to look at consolidation as the only way to boost revenues.
Recently, the Supreme Court allowed the government’s plea to recover adjusted gross revenue of about Rs 92,000 crore from telcos, that further adds to their stress.