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TELECOMMUNICATION MAY 2017 (As of 25 May 2017) For updated information, please visit www.ibef.org 1 TELECOMMUNICATION ❖ Executive Summary…………………………. 3 ❖ Advantage India………………………..….… 4 ❖ Market Overview and Trends…………..….. 6 ❖ Porter’s Five Forces Analysis……………..22 ❖ Strategies Adopted…………………………24 ❖ Growth Drivers……………………….…….. 26 ❖ Opportunities……………………….……… 39 ❖ Success Stories…………………………… 43 ❖ Useful Information………………….……... 49 MAY 2017 For updated information, please visit www.ibef.org 2 TELECOMMUNICATION EXECUTIVE SUMMARY Second-largest • With a subscriber base of nearly 1185.55 million, as of February 2017, India accounted for subscriber base the 2nd largest telecom network in the world Third-highest number of • With 391.50 million internet subscriber, as of December 2016, India stood 3rd highest in internet users terms of total internet users in 2016. Most of the Internet • Mobile based Internet is a key component of Indian Internet usage, with 7 out of 8 users accessing internet from their mobile phones accessed through • Since 2012, the share of time spent on watching videos on mobile devices has grown by mobile phones 200 hours a year • As of February 2017, urban tele-density stood at 166.77 per cent and rural tele-density at Rising penetration rate 55.92 per cent Affordability and lower • Availability of affordable smartphones and lower rates are expected to drive growth in the rates Indian telecom industry Source: Telecom Regulatory Authority of India, TechSci Research MAY 2017 For updated information, please visit www.ibef.org 3 TELECOMMUNICATION ADVANTAGE INDIA TELECOMMUNICATION ADVANTAGE INDIA FY171 GrowingRobust demanddemand Attractive opportunities FY20F • India is the world’s 2nd largest • Telecom penetration in the nation’s rural telecommunications market, with market is expected to increase to 70 per Number of 1.19 billion subscribers as of cent by 2017 from 55.92 per cent, as of Number of subscribers: February, 2017 December 2016 subscribers: 1.19 billion • India became the 2nd largest internet 1.3 billion • With 70 per cent of the population market in December 2014 staying in rural areas, the rural • The government of India has introduced market would be a key growth Digital India programme under which all driver in the coming years the sectors such as healthcare, retail, etc. will be connected through internet Advantage High ratings India Policy support • The country has a strong • The government has been proactive in telecommunication infrastructure its efforts to transform India into a global telecommunication hub; • In terms of telecommunication prudent regulatory support has also ratings, India ranks ahead of its helped peers in the West and Asia • National Telecom Policy 2012 calls for unified licensing, full MNP and free roaming Source: BMI (Business Monitor International) Report, TechSci Research, Internet Mobile Association of India (IAMAI) Notes: MNP - Mobile Number Portability 1Data as of February 2017 MAY 2017 For updated information, please visit www.ibef.org 5 TELECOMMUNICATION MARKET OVERVIEW AND TRENDS TELECOMMUNICATION THE TELECOM MARKET SPLIT INTO THREE SEGMENTS • Comprises establishments operating and maintaining Mobile (wireless) switching and transmission facilities to provide direct communications via airwaves • Consists of companies that operate and maintain switching Fixed-line and transmission facilities to provide direct communications Telecom (wireline) through landlines, microwave or a combination of landlines and satellite link-ups • Includes Internet Service Providers (ISPs) that offer Internet broadband internet connections through consumer and services corporate channels Source: TechSci Research MAY 2017 For updated information, please visit www.ibef.org 7 TELECOMMUNICATION TELECOM SUBSCRIBER BASE EXPANDS SUBSTANTIALLY India is currently the 2nd largest telecommunication market Growth in total subscribers and has the 3rd highest number of internet users in the world 1400 100 90 India’s telephone subscriber base expanded at a CAGR of 1200 19.16 per cent, reaching 1188.5 million during FY07–17 80 1000 70 Tele-density (defined as the number of telephone 800 60 connections for every 100 individuals) in India, increased 50 from 17.9 in FY07 to 92.59 in FY171 600 40 400 30 20 200 10 1058.86 951.34 205.86 300.49 429.72 621.28 846.32 898.02 846.32 996 1188.5 0 0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1 Telephone Subscriber (in million) Teledensity Source: Telecom Regulatory Authority of India, TechSci Research Notes: CAGR - Compound Annual Growth Rate 1Data till February 2017 MAY 2017 For updated information, please visit www.ibef.org 8 TELECOMMUNICATION SURGING TELECOM REVENUES Indian telecom sector’s revenue grew at a CAGR Telecom Sector Revenue (US$ Billion) of 7.17 per cent to US$39.2 billion in FY16 as compared to US$19.6 billion in FY06 CAGR: 7.17% Revenues from the telecom equipment is estimated at US$20 billion in FY16. 40.8 41.7 37.7 39.1 38.8 39.2 32.1 33.2 33.3 23.3 19.6 FY 14 FY FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 15 FY 16 Source: Telecom Regulatory Authority of India, TechSci Research Note: CAGR - Compound Annual Growth Rate; FY – Indian Financial Year (April – March); Figures mentioned are as per latest data available MAY 2017 For updated information, please visit www.ibef.org 9 TELECOMMUNICATION WIRELESS SEGMENT DOMINATES THE MARKET In March 2016, India’s telephone subscriber base reached Composition of telephone subscribers (FY16) 1058.86 million 2.0% 0.4% In March 2016, the wireless segment (97.60 per cent of total telephone subscriptions) dominated the market, with the wireline segment accounting for an overall share of 2.4 per cent Urban Wireless Rural Wireless Urban regions accounted for 57.29 per cent share in the 40.31% overall telecom subscriptions in the country, while rural Urban Wireline areas accounted for the remaining share 57.29% Rural Wireline Source: Telecom Regulatory Authority of India, TechSci Research MAY 2017 For updated information, please visit www.ibef.org 10 TELECOMMUNICATION WIRELESS SUBSCRIPTIONS WITNESS ROBUST GROWTH OVER THE YEARS Wireless Subscription (in Million) During FY07-16, wireless subscriptions in the country increased at a CAGR of 22.94 per cent, with the number of subscribers reaching to 1,058.85 CAGR: 22.94% million in FY16 1058.9 969.8 943.9 919 In FY16, urban wireless teledensity stood at 148.73 868 while rural wireless teledensity stood at 50.88 812 584 India is the world’s 2nd largest smartphone market & 392 261 is expected to have almost 1 billion unique mobile 165 subscribers by 2020 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Source: Telecom Regulatory Authority of India, TechSci Research Notes: CAGR - Compound Annual Growth Rate MAY 2017 For updated information, please visit www.ibef.org 11 TELECOMMUNICATION WIRELESS TELEDENSITY GROWS OVER THE YEARS The mobile segment’s teledensity surged from 14.6 per cent Growth in wireless teledensity in FY07 to 90.70 per cent in FY171 FY07 14.60% GSM services continue to dominate the wireless market FY08 with a 98.66 per cent share (as of December 2016); while 22.80% FY09 CDMA services accounted for the remaining 1.34 per cent 33.70% share. FY10 49.70% FY11 68% FY12 76% FY13 70.90% FY14 75.43% FY15 77.27% FY16 81.38% 1 FY17 90.70% Source: Telecom Regulatory Authority of India, TechSci Research Notes: Teledensity - The number of telephone lines for every 100 people in a country, GSM - Global System for Mobile Communications, CDMA - Code Division Multiple Access 1Data till February 2017 MAY 2017 For updated information, please visit www.ibef.org 12 TELECOMMUNICATION WHILE BHARTI AIRTEL DOMINATES WIRELESS SEGMENT… As of February 2017, Bharti Airtel was the market leader, Access Service Provider-wise market share in terms with a 23.25 per cent share in the wireless subscription, of wireless subscribers (FY171) followed by Vodafone (17.80 per cent share) 0.19% 0.45% 0.31% The top 5 players in the sector include - Bharti Airtel, Bharti Airtel Vodafone, Idea, Reliance and BSNL – accounting for 74.98 per cent of the wireless subscribers in the country 4.94% Vodafone 4.10% Idea 23.25% 7.41% BSNL 7.82% Reliance Jio Aircel 8.83% Reliance 17.80% Tata 8.50% Telenor 16.60% Sistema MTNL Quadrant Source: Telecom Regulatory Authority of India, TechSci Research Notes: BSNL - Bharat Sanchar Nigam Limited 1Data till February 2017 MAY 2017 For updated information, please visit www.ibef.org 13 TELECOMMUNICATION BSNL DOMINATES FIXED-LINE SEGMENT Total fixed-line subscription stood at 24.52 million, while teledensity reached 1.92 per cent due to wide usability of the wireless segment in FY17 In FY17, BSNL is the market leader with a 56.60 per cent share, followed by Bharti Airtel (15.53 per cent) BSNL, MTNL & Bharti together account for 86.35 per cent of the total fixed-line market in FY17. Fixed-line segment subscription and teledensity Fixed-line market share (FY171) (FY171) 0.51% 1.06% 0.24% 45 4 BSNL 4.79% 40 3.5 7.05% Bharti Airtel 35 3 Bharti MTNL 30 2.5 14.22% 25 Tata 2 20 Reliance 15 1.5 56.60% 1 Quadrant 10 15.53% 5 0.5 39 38 37 35 32 30 28 27 25.99 24.52 41 Vodafone 0 1 0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Sistema Wireless subscription (in millions) Wireless density - RHS Source: Telecom Regulatory Authority of India, TechSci Research Notes: BSNL - Bharat Sanchar Nigam Limited 1Data till October 2016 MAY 2017 For updated information, please visit www.ibef.org 14 TELECOMMUNICATION NUMBER OF INTERNET SUBSCRIBERS INCREASING AT A FAST