A

Business Dissertation

On

“A critical study of telecom sector in India”

Submitted to
School Of Petroleum Management
Pandit Deendayal Energy University
Gandhinagar

In
Partial Fulfillment of the Requirements
For The Award Of
Master of Business Administration

Under the Guidance of

Dr. Pramod Paliwal

Dean & Professor

Submitted by
Dineshkumar Pamnani
Batch: General Management Enrollment No.: 20205027

March, 2022

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 DECLARATION

I, Dineshkumar Pamnani, student of MBA Batch General Management School Of

Petroleum Management, Pandit Deendayal Petroleum University, Gandhinagar
hereby declare that the Business Dissertation entitled “A critical study of
telecom sector in India” is a result of my own research work and our
indebtedness to other work publications, references, if any, have been duly
acknowledged. I shall be solely responsible for any plagiarism or other
irregularities, if noticed in the thesis.

I assert that the statements made and conclusions drawn are the outcome of my
own research work. I further declare that to the best of my knowledge and belief
that the Business Dissertation does not contain any part of any work which has
been submitted for the award of any other degree/diploma/certificate in this
University or any other University in India or Abroad.

Place: Gandhinagar
Date: 10th March, 2022 Dineshkumar Pamnani

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 PLAGIARISM DECLARATION

I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend
that it is one’s own. Dissertation has significant new work / knowledge as
compared already published or is under consideration to be published
elsewhere. No sentence, equation, diagram, table, paragraph or section has
been copied verbatim from previous work unless it is placed under quotation
marks and duly referenced. I have used a recognized convention for citation and
referencing. Each significant contribution and quotation from the works of other
people has been attributed, cited and referenced
The thesis has been checked using <Turnitin> (copy of originality report
attached) and found within limits as per PDPU Plagiarism Policy and instructions
issued from time to time.
I certify that this submission is my own work. I have not allowed and will not
allow anyone to copy this work with the intention of passing it off as his or her
own work.

Place: Gandhinagar
Date: 10th March, 2022 Dineshkumar Pamnani

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Turnitin Report

4
 CERTIFICATE

I certify that the work incorporated in this Business Dissertation titled “A critical
study of telecom sector in India” submitted by Dineshkumar Pamnani was
carried out by the student under my supervision/guidance. To the best of my
knowledge: (i) the student has not submitted the same research work to any other
institution for any degree/diploma, Fellowship or other similar titles (ii) the
Business Dissertation submitted is a record of original research work done by the
student during the period of study under my supervision, and (iii) the Business
Dissertation represents independent research work on the part of the student.

Place: Gandhinagar (Signature)

Date: 10th March, 2022 Dr. Pramod Paliwal

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 PREFACE

The present report is an outcome of the research oriented - Business

Dissertation course of the School of Petroleum Management, Pandit
Deendayal Energy University (SPM, PDEU), formerly PDPU. The objective
of this course is to develop and complete a supervised research on a topic within
the domain of business where we can apply the knowledge and develop the
capacity of being creative and of innovative thinking to enhance the analytical
skills.

The report summarizes my work on “A critical study of telecom sector in India”

and the learning I gained from it. The report contains the data that are collected
from the open sources - journals, websites, govt. reports, interviews etc and my
analysis during Secondary research. The outcome of this report depends solely
based on my understanding of the Telecom sector.

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 ACKNOWLEDGEMENT

The success and the final outcome of this project had required a lot of guidance
and assistance from many people and I am fortunate enough to get all these
which led me to my project completion.

I thank my institute SPM, PDEU, for providing me with this keen opportunity
which explored greater opportunities for me.

I’m pleased to record my deep sense of gratitude and indebtedness to my faculty

co-ordinator, Dr. Pramod Paliwal, Dean, School of Petroleum Management, a
perfectionist for his valuable guidance, advice, timely help, and excellent
suggestions to carry out and complete the project work and to teach the value of
discipline.

I would also like to thank all those who have directly or indirectly extended
their support in the completion of this project.

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 Table of Contents

Sr no. Topic Page No.

1 Introduction 13

1.1 Decadal view of Telecom sector of India 16

2 Literature review 18

3 Research Methodology 21

3.1 Research Gap 22

3.2 Objective 22

3.3 Methodology 22

3.4 Scope/ Limitation 22

4 Data analysis & Interpretation 23

4.1 Competition 24

4.2 Government Initiatives 27

5 Findings 30

6 Conclusion & Recommendations 32

7 References 34

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LIST OF FIGURES

Sr no. Label Description Page no.

1 Fig 1. Composition of Telephone subscribers 14

2 Fig 2. Telecom sector’s decadal view 16

3 Fig 3. Brief of competition in industry over years 17

4 Fig 4. Key players of Telecom sector in India 24

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 LIST OF ABBREVIATIONS

AAEC - Appreciable Adverse Effect on Competition

AGR - Adjusted Gross Revenue

ARPU - Average Revenue Per User

BWA - Broadband Wireless Access

CAGR - Compounded Annual Growth Rate

CCI - Competition Commission of India

CDN - Content Delivery Network

COAI - Cellular Operators Association of India

CPP - Calling Party Pays

DoT - Department of Telecom

FDI - Foreign Direct Investment

FNP - Fixed Line Portability

FTTH - Fiber to the Home

GDPR - General Data Privacy Rules

HHI - Herfindahl-Hirschman Index

ISP - Internet Service Provider

IUC - Interconnection Usage Charge

LTE - Long Term Evolution

MNP - Mobile Number Portability

MoU - Minutes of Use

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MVNO - Mobile Virtual Network Operator

NDCP - National Digital Communication Policy

NTP - National Telecom Policy

PDO - Public Data Offices

PPP - Purchasing Power Parity

OTT - Over-the-Top

QoS - Quality of Service

RAN - Radio Access Network

RoW - Right of Way

SEP - Standard Essential Patents

SMP - Significant Market Power

SMRA - Simultaneous Multiple Round Ascending

STV - Special Tariff Voucher

SUC - Spectrum Usage Charges

TMT - Technology, Media and Telecommunications

TRAI - Telecom Regulatory Authority of India

TSP - Telecom Service Provider

UL - Universal License

UAS - Unified Access Services

VIL - Vodafone-Idea Limited

VNO - Virtual Network Operators

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 ABSTRACT

Over the last 13 years, India's telecom business has seen significant changes. It has gone from
being an investor's darling in 2007 to being one of the country's most heavily indebted
sectors. This is a descriptive research that tries to examine the events of the previous decade
in order to better understand the causes behind telecom operators' indebtedness and stress.
The research found that government restrictions permitted significant levels of competition,
with over 21 operators in the business at its peak, putting downward pressure on the
operators' pricing power and profitability. Overbidding was a result of high reserve prices in
spectrum auctions, which contributed considerably to the industry's debt. The profit margins
of the businesses were diminished by taxes and levies. It's no wonder that the sector was
under a lot of pressure because of the debt payment commitments. The near-free services
provided by Reliance Jio triggered a wave of consolidation in the market. The industry now
has four operators, down from twenty-one previously. Because the sector's current stability is
precarious, every regulation or policy must be carefully considered before being
implemented.

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1. Introduction

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With 1.16 billion subscribers, India is the world's second-largest telecommunications market,
and it has experienced rapid expansion in the recent decade. According to a report developed
by the GSM Association (GSMA) in partnership with Boston Consulting Group, India's
mobile economy is fast increasing and will contribute significantly to the country's Gross
Domestic Product (GDP) (BCG). In 2019, India overtook the United States as the second-
largest market for app downloads. Mega telecom operators and hyper-competition among
them have enabled it to have one of the lowest call tariffs in the world.

Telephone, internet, and television broadcasting are major sectors of the Indian
telecommunications industry, which is in the process of transforming into a next-generation
network and employs an extensive system of modern network elements such as digital
telephone exchanges, mobile switching centers, media gateways, and signaling gateways at
the core, interconnected by a variety of transmission systems using fiber-optics or microwave
radio relay. The access network, which links the subscriber to the core, is made up of a
variety of copper-pair, optical-fiber, and wireless technologies. In the television section,
DTH, a relatively new broadcasting technology, has gained great appeal. Radio transmission
in India has gotten a boost because to the launch of private FM. India's INSAT system, one of
the world's largest domestic satellite systems, has tremendously aided telecommunication in
the country. India has a diverse communications infrastructure that uses telephone, Internet,
radio, television, and satellite to connect all sections of the nation.

Since the 1990s, the Indian telecom sector has experienced rapid market liberalization and
expansion, and it is presently the world's most competitive and fastest expanding telecom
market. Telecommunications has aided India's socioeconomic growth and has helped to close
the digital divide between rural and urban areas to some extent. With the development of e-
government in India, it has also aided in increasing governance transparency. The
government has made effective use of modern telecommunications to give mass education
programmes to India's rural population.

Fig.1 Composition of Telephone subscribers

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The telecom sector contributed for 6.5 percent of India's GDP in 2015, or over Rs 9 lakh
crore (US$120 billion), according to the London-based telecom trade association GSMA, and
provided direct employment for 2.2 million people in the country. According to the GSMA,
the Indian telecom business generates Rs 14.5 lakh crore (US$190 billion) in revenue and
supports 3 million direct and 2 million indirect employment as of 2020.

In the first quarter of FY22, the telecom sector's gross revenue was Rs 64,801 crore (US$
8.74 billion). The government's strong policy backing has been critical to the sector's
development. India is one of the world's largest data consumers. According to TRAI, the
average monthly wireless data use per wireless data subscriber was 11 GB in FY20. The
number of app downloads in the country climbed from 12.07 billion in 2017 to 19 billion in
2019, with 37.21 billion predicted by 2022F. In the first quarter of FY22, India's overall
cellular data use increased 16.54 percent quarterly, reaching 32,397 PB. In the third quarter
of FY21, 3G and 4G data consumption contributed 1.78 percent and 97.74 percent,
respectively, to the overall volume of wireless data usage. In the same quarter, 0.48 percent
of people used 2G data (IBEF, 2021).

The government of India has designated each state as a circle in the telecom sector. "Metro"
and "A," "B," and "C" are the names of the circles. Subscriber potential determines the "C"
zones. Delhi, Mumbai, Chennai, and Kolkata are known as "metros." Maharashtra, Gujarat,
Andhra Pradesh, Karnataka, and Tamil Nadu make up Circle A. Kerala, Punjab, Haryana,
Uttar Pradesh (East and West), Rajasthan, M.P., and West Bengal make up Circle B.
Himachal Pradesh, Bihar, Orissa, Assam, and the North East make up Circle C. Mahanagar
Telephone Nigam Ltd was formed after the separation of Bombay and Delhi Telephones
(MTNL).

Technological modernization is increasingly recognized as a predicted requirement for any

country in today's age of prosperity and affluence. Telecommunications has entered a new
age of growth, with improved technology and more competition from established enterprises.
The telecoms sector's technical developments are tied to the mobile industry's continued
growth. The major objective of service providers is to establish a loyal client base by
monitoring their performance and keeping existing customers so that they may profit from
their loyalty.

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According to a Zenith Media analysis, India will become the fastest-growing telecom
advertisement industry between 2020 and 2023, with an annual growth rate of 11%.

1.1 Decadal view of Telecom sector of India

When the New Telecom Policy was unveiled in 1999, there were thirteen private mobile
service providers using 2G technology. By 2019, the number of operators has been decreased
to eight due to departures and consolidation. With 4G technology installed in all private
networks, telecom networks are now the backbone of India's digital economy.

Fig.2 Telecom sector’s decadal view

The country-wide shutdown imposed by COVID-19 unmistakably demonstrated the

importance of communications in sustaining economic activity and amplified its growth
implications. During this time, the sector's contribution to India's GDP is predicted to have
expanded by 5 to 6 times The current market structure supports the empirical conclusion
known as the rule of three, which states that mature marketplaces typically sustain three
primary rivals, with others surviving on the periphery or in a niche.

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Fig.3 Brief of competition in industry over years

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2. Literature Review

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Monalisha Patnaik, Abhipsa Ray, Biswa Bhusan Mall, Rosemary Kujur, Silpa Jena and
Somu Jena (2015) discovers the important variables for increasing customer happiness in
order to enhance acquisition and retention. The report also demonstrates that customer
happiness is influenced by brand choice, consumer perception, distributor perception,
marketing strategy, service quality, and delivery.

Suraj Kushe Shekhar (2015) reveals that he visibility to consumers, customer assistance,
customer response, and complaint resolution are the attitudes of Indian customers and
retailers towards cellular providers in India, according to the study.

Ascarza Eva and Neslin Scott A (2016) discovers a number of KPIs for measuring and
monitoring client retention. The author also developed an integrated approach for managing
retention that takes advantage of new data sources and techniques to maximize opportunities.
The research also offered a broader view of consumer retention.

D. Satyanarayana, Dr. K. Sambasiva Rao and Dr. S. Krishnamurthy Naidu (2017)

investigate how the JIO's free tsunami causes a slew of dramatic and unexpected shifts in
customer behaviour as well as competition strategy. Reliance JIO's arrival disrupted the
mobile industry's equilibrium, forcing competitors such as Airtel, Vodafone, and Idea to
consolidate their operations in order to better customer experience.

M. Sankara Rao Prof. P. Srinivas Subbarao (2017) examine how mobile number portability
allows customers to switch from one network to another based on the quality of services and
options provided by the Indian telecom service provider.

Dr. S.P. Maithiraj (2018) demonstrates that poor service quality, value added services,
promotional offers, and customer care services have influenced consumer buying behaviour,
prompting customers to migrate from their current service provider to a new one.

Abani Mohanty and Dr. Sabyasachi Das (2018) explore if maintaining existing consumers is
simpler for businesses than attracting new clients. Customers gain from retention techniques
such as keeping them informed, attempting to identify their changing requirements, offering
varied VAS trial offers, forgiving late payment costs, resolving complaints, not terminating
the service, and providing gifts and freebies. The report identifies customer retention tactics
that telecommunications service providers may use to maintain consumers for extended
periods of time.

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Mishra Arjyolopa, Pradhan Amruta, Bisht Oasis (2018) investigate the post-merger and
acquisition dynamics of trusts, as well as integration strategy in the Indian telecom sector, as
variables that contribute to a successful merger and its beneficial influence on consumers,
market, and company. These issues are equally to blame for the failure of a merger between
the two organisations.

The TRAI report (2015 & 2019) illustrates that a variety of factors influence the telecom
industry's success and that a suitable framework is needed to improve the sector's
performance. Technology readiness, cost incentives for telecom businesses, social tendency
to embrace OTT, strength of OTT platforms, and scalability of telecom services are all
variables that influence the telecom industry's performance.

Parsheera Smriti (2018) reveals that the Indian telecom sectors are entering a new period of
development, according to the report. As the telecom industry's goals move from traditional
telecom services to high-speed internet access, policy and regulatory frameworks must adapt.
The analysis emphasises some of the telecom sector's core difficulties, including dependency
on cellular networks, high spectrum costs, and ongoing digital infrastructure development. In
order to improve consumer happiness, the author also suggested that regulators adopt and
build certain measures to minimise such obstacles and uncertainties in the market.

Sigit Haryadi (2018) investigate how the telecom regulatory body limits mobile connection
tariffs, making it difficult for telecom service providers to gain users. The client is the key to
success slogan in any industry, and this is especially true in the Indian telecom industry,
where profit margins are quite low and there is increasing rivalry among companies, allowing
customers to switch from one service provider to another. As a result, the industry is losing
not just customers, but also revenue market share, profitability, and stakeholder confidence.

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3. Research Methodology

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3.1 Research Gap
Much of the research was done on a granular level being specific to a company or on a
generic topic which did not focused on the bigger picture of analyzing the Telecom market as
whole. Also, the sector was moving towards dualistic structure which makes it more
intriguing to study the sector.

3.2 Objectives

The following research objectives are addressed in this dissertation study

• To examine the Indian telecom industry's history and progress.

• To conduct a review of the government's telecommunications policy.
• To determine the current trends in the Indian telecom industry.
• To study the Indian telecom industry's future development prospects.

3.3 Methodology

The current analysis is based on secondary data gathered from the Telecom Regulatory
Authority of India (TRAI), the Department of Telecommunication (DoT), and government of
India bulletins, among other sources. For information, many telecom periodicals, newspapers,
and journals were studied. Information was also gathered from recorded interviews with
people working at various levels in India's telecom corporations.

3.4 Scope/limitation

The following summarizes the project's limitations:

• Disruption in the sector either by government norms or by nature of competition in

sector may change the real scenario of sector and as a result the data collected may
become void.
• Some data may be skewed by individuals in positions of power or based on their
biasness, limiting the outcome of a secondary data.
• Unpublished literature may be included in certain secondary data, which cannot
always be validated.
• Due to the vastness of the topic it is difficult to add every event under this report.
• The way things are measured may change with time, making it difficult to make
historical decisions.

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4 Data Analysis & Interpretation

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4.1 Competition

The Telecom market is spilt into 3 segments

1. Mobile (wireless)

2. Fixed-line (wireline)

3. Internet services

Following are the key players of the sector

Fig.4 Key players of Telecom sector in India

Note: Recently government bought 36% shares in Vi

The Indian telecom market has following advantages to help in growth:

• Robust demands
• Attractive opportunities
• Policy support
• Rise in Investment

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To get better idea of the sector in current times below are the recent trends within the sector

• Green telecom - The green telecom idea aims to reduce the telecom industry's carbon
footprint through lowering energy use. To encourage green technologies in the sector,
the government recommended forming a joint task force between the Ministry of New
and Renewable Energy (MNRE) and the Department of Telecommunication.
• Market expansion into remote areas - The government's Universal Service Obligation
Fund would give subsidised support to over 62,443 uncovered communities in India
with village telephone service (thereby increasing rural tele-density). Excitel, a
broadband service provider, wants to seek Rs. 200 crore (US$ 28.37 million) in
finance to extend its FTTH (fibre to the house) network and have a presence in 50
cities by December 2021 (IBEF, 2021).
• Daily commercial SMS traffic in India has climbed by 20% as a result of stronger
post-pandemic digital usage, despite the fact that general text messaging continues to
decline. Every day, around 1.3 billion commercial SMSs are sent.
• BWA technologies are becoming more popular - BWA technologies like WiMAX
and LTE are among the most recent and significant advancements in wireless
communication. Since 2019, Bharti Airtel VoLTE and Reliance Jio 4G services have
been available in all 22 telecom circles.
• In December 2020, the Union Cabinet, led by Prime Minister Narendra Modi,
accepted a proposal from the Department of Telecommunications to establish Public
Wi-Fi Networks by Public Data Office Aggregators (PDOAs) to provide public Wi-Fi
services through Public Data Offices (PDOs).
• Inestment in optical fibre - On September 21, 2020, Prime Minister, Mr. Narendra
Modi, inaugurated an initiative to link all 45,945 villages in Bihar with optical fibre
internet service under the Jio GigaFiber brand. The project will be finished by March
31, 2021, at a cost of Rs. 1,000 crore (US$ 135.97 million); the Department of
Telecommunications will fund Rs. 640 crore (US$ 87.01 million) of capital
expenditure. Under the Jio GigaFiber brand, Reliance Jio Infocomm plans to expand
its optical fibre network to over 1,100 cities (IBEF, 2021).

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Strategies adopted

1. Marketing strategy - In order to thrive in this industry, players are employing cutting-
edge marketing methods.
• #StrongerEveryHour was introduced by Vodafone Idea to promote the upgraded
network of Vodafone SuperNet 4G - India's Data Strong Network.
• Airtel has launched a new ad campaign called "Sab Kuch Try Karo, Fir Sahi
Chuno," as well as a new campaign called "Open to Questions," emphasising the
company's goal of resolving every single customer concern, learning swiftly from
errors, and ensuring that they are not repeated.
2. Differentiation - Customers are served in a variety of ways, which allows players to
differentiate themselves in the market.
• Bharti Airtel has previously teamed with Amazon Prime and Hotstar, and is set to
combine with Netflix to provide its mobile subscribers a free Netflix membership.
• Reliance Jio announced a partnership with 22 international airlines for in-flight
internet access in September 2020, with rates beginning at Rs. 499 (US$ 6.76) per
day.
• Airtel and Radware joined in September 2020 to offer cloud security services to
Indian enterprises.
3. Reduced the number of plans offered - Players have decreased the amount of plans
available, offering only a few straightforward tariff choices as well as flagship plans.
• Customers may now find the best offers by themselves, making it easier for them
to purchase programmes.
4. Pricing strategy - Due to the price sensitive nature of clients and the considerable
rivalry in the industry, players price their products extremely carefully.

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4.2 Government Initiatives

The government has accelerated telecom reforms and continues to be aggressive in allowing
opportunity for telecom businesses to flourish. The following are some of the government's
major initiatives:

• In case of call drops compensate the consumers - In August 2017, the Telecom
Regulatory Authority of India (TRAI) instructed carriers to have a call-drop rate of no
more than 2%. TRAI's policy initiatives have had a favourable impact. In March
2018, the country's call-drop rate dropped from 0.94 percent in 2016 to 0.52 percent.
• Wireline and wireless service quality standards - In 2015, the Telecommunications
Regulatory Authority of India (TRAI) issued regulations amending the quality criteria
for landline (telephone service) and cellular mobile telephone services. These rules
were put in place to guarantee that quality-of-service laws were followed and that
consumers' interests were protected.
• FDI rules that are less stringent - Foreign direct investment in the telecom sector has
been expanded from 74% to 100%. In October 2021, the government announced 100
percent foreign direct investment (FDI) via the automatic method in the telecoms
industry, up from 49 percent before. Infrastructure firms that provide dark fibre,
electronic mail, and voice mail can bring in up to 100 percent FDI.
• Telecommunication tariff order - In February 2018, the Telecom Regulatory
Authority of India (TRAI) passed the Telecommunication Tariff (63rd Amendment)
order, which states that telecom companies are free to offer promotional offers to
customers as long as the offers are transparent, non-discriminatory, and non-
predatory.
• International Collaborations - India and Japan signed a Memorandum of
Understanding (MoU) on January 15, 2021 to expand their collaboration in the field
of information and communications technologies. The MoU was signed by Ravi
Shankar Prasad, Union Minister for Communications, Electronics and IT, and Takeda
Ryota, Japanese Minister of Internal Affairs and Communications. Inmarsat Holdings
Ltd., a British satellite operator, stated in October 2021 that it is the first foreign
operator to receive India's authorisation to provide high-speed internet to planes and
ships. After receiving a licence from the Department of Telecommunications,
Inmarsat will enter the market through Bharat Sanchar Nigam Ltd. (BSNL).

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• Monetary assistance - The Department of Telecommunications (DoT) began talks
with banks in August 2021 to address financial hardship in the telecom sector, notably
Vodafone Idea Ltd. (VIL), which is in desperate need of cash. The USOF (Universal
Service Obligation Fund) is planned to provide financial assistance to rural service
providers and stimulate active infrastructure sharing among them.
• Setting of Internet connections - As part of the National e-Governance Plan, the
Department of Information Technology plans to establish over 1 million internet-
enabled common service centres across India.
• Spectrum limit has been increased - For GSM technology, the mandated spectrum
limit would be increased from 6.2 MHz to 2x8 MHz (paired spectrum) in all locations
except Delhi and Mumbai, where it will be 2x10 MHz (paired spectrum). Telecom
companies, on the other hand, can gain greater frequency. There will be a spectrum
auction, but only within the boundaries set for licence mergers. The Department of
Telecommunications (DoT) published a Notice Inviting Applications (NIA) for a
spectrum auction in the 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz,
2,300 MHz, and 2,500 MHz bands on January 6, 2021. The deadline for applications
to participate in the auction is February 5, 2021, and the sale will begin online on
March 1, 2021 (IBEF, 2021).
• Quantum communications lab - Mr. K. Rajaraman, Telecom Secretary, inaugurated
the Quantum Communication Lab at the Centre for Development of Telematics (C-
DOT) in Delhi in October 2021, and showcased the C-indigenously DOT's designed
Quantum Key Distribution (QKD) technology. The development of the QKD solution
is anticipated to address the danger posed by rapid growth in quantum computing to
the security of data being conveyed by current communication infrastructure. QKD
can sustain a distance of >100 km on normal optical fibre.
• Make in India - To stimulate local manufacture of mobile devices, the Indian
government created the Phased Manufacturing Programme (PMP). This project will
aid in the development of a strong indigenous mobile manufacturing ecosystem in
India, as well as encourage large-scale production. In January 2020, HFCL Limited
delivered 100,000 Wi-Fi systems in a record period, claiming that Wi-Fi Access
Network Interface (WANI) in conjunction with the government's ambitious
BharatNet plan will boost broadband adoption in rural India. The production-linked
incentive (PLI) plan for Large Scale Electronics Manufacturing was authorised by the

28
 government in March 2020. The plan provides a production-linked incentive to
stimulate domestic manufacturing and attract substantial investments in mobile phone
manufacture and certain electronic components, such as ATMP units (Assembly,
Testing, Marking, and Packaging).
• Tenders are being sought for the BharatNet project, which is a public-private
partnership. In July 2021, on behalf of the Department of Telecommunications,
Bharat Broadband Network Limited (BBNL) issued a global procurement for the
establishment of BharatNet using the Public Private Partnership model in nine distinct
packages across 16 states for a 30-year concession term. As viability gap finance, the
government would offer a maximum grant of Rs. 19,041 crore (US$ 2.56 billion)
under this project. In Kerala, Karnataka, Rajasthan, Himachal Pradesh, Punjab,
Haryana, Uttar Pradesh, Madhya Pradesh, West Bengal, Assam, Meghalaya, Manipur,
Mizoram, Tripura, Nagaland, and Arunachal Pradesh, the project would cover 3.6
lakh villages (including gramme panchayats).
• Other reforms - The Indian government approved structural and process reforms in
the telecom sector in September 2021 in order to protect and generate employment
opportunities, promote healthy competition, protect consumer interests, encourage
investments, and reduce regulatory burden on telecom service providers (India –
Telecom Reforms & The Way Forward., 2022).

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5 Findings

30
• Rise in number of mobile subscribers - From 1,200 million in 2018, India's mobile
subscriber number is predicted to grow to 1,420 million by 2024. The number of 4G
users is estimated to reach 820 million by 2022 (IBEF, 2021).
• Untapped rural market - Tele-density of rural customers increased to 59.33 percent in
September 2021 from 58.96 percent in September 2020, indicating a great potential
market left untouched. This rise suggests a possible increase in demand from the rural
sector (DOT, 2020).
• Increasing Internet penetration - Internet penetration is predicted to continue to rise
gradually, aided by government policies. In FY20, there were 687.44 million
broadband customers. The Indian government stated that more than 1,000 gram
panchayats will receive free Wi-Fi for the same.
• Infrastructure development for telecommunications - The Telecom Regulatory
Authority of India (TRAI) has offered various proposals for the development of
communication infrastructure, including tax incentives and recognition of telecom
infrastructure as vital infrastructure.
• MVAS is expanding - During the projected period of 2015-2020, the Indian mobile
value-added services (MVAS) market was predicted to grow at a CAGR of 18.3%,
reaching US$ 23.8 billion by the end of 2020. Achieving the same it is still on roll.
• Market for telecom advertising - According to a Zenith Media report, India is
anticipated to become the fastest-growing telecom advertisement industry between
2020 and 2023, with an annual growth rate of 11% (IBEF, 2021).
• Increasing the number of cashless transactions - In October 2021, transfers over the
universal payments interface (UPI) reached an all-time high of 4.21 billion (by
volume), with transactions totaling Rs. 7.71 trillion (US$ 103.59 billion), resulting in
increase in demand to adapt to the change and become more technologically sound.
• Net Neutrality: As data-rich packaged products become more common, adherence to
net-neutrality rules will be critical to maintaining healthy competition. As technology
convergence pushes more integration across the value chain, net neutrality principles
will become more prominent. Telecom corporations are investing in digital content
companies, digital payment platforms, and social media companies, as well as the
other way around, which might lead to a preference for their own content or network
(Mittal, 2021).

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6 Conclusion & Recommendations

32
Reliance Jio's first aim was to give three months of free data and voice, then keep the free
voice offer indefinitely while charging a modest amount for mobile data. This approach is
similar to the traditional Silicon Valley bet: invest money up front to gain users, then make
up the difference via volume due to a superior cost structure allowed by its 4G only network
and the near-zero-marginal cost nature of technology. Jio's debut was great since it came at a
time when competitors' 4G networks were failing, it provided free Internet to a nation and
demographics who couldn't afford it, and it expanded its addressable market while
competitors relied on legacy phone and SMS income. Competitors in the mobile network
space immediately found it difficult to compete, resulting in a large wave of consolidation.

It's also important to note that government policies had a big role in incumbents' incapacity to
respond to Jio's price approach. Government restrictions allowed multiple operators to enter
the market, established high reserve prices for spectrum auctions, and taxed the business
severely. Following a wave of consolidation, the quantity of competition in each nation was
brought up to par with that of other countries, i.e. 3-4 operators per country. The introduction
of universal licences, as well as the liberalisation of spectrum obtained in an auction,
completely overhauled the licencing structure and eliminated the previously granted
business- or technology-specific licences.

Most of telecoms companies are selling assets to infrastructure companies to pay off debts
and make further investments in capacity and coverage for their mobile networks. However,
in the short to medium term, the telcom sector is likely to see some corporate activity,
particularly in the fixed broadband market, which is now expected to be under pressure
following Jio Fiber's launch, and which will also broaden the scope of services beyond
carriage to include content and e-Commerce.

The government's spectrum management strategy is a source of worry. If reserve prices in

future auctions are set at exorbitant levels as they have been, the industry's delicate
equilibrium will be quickly undone. Given the importance of the sector to the country's
growth, it is recommended that the government refrain from selling spectrum rights at
exorbitant rates and subsequently collecting rent as a revenue share (Sekhon, 2022). Over the
next two to three years, a fresh wave of M&A and network sharing transactions will continue
to consolidate around the main mobile providers, Bharti Airtel, Vodafone Idea, and Reliance
Jio.

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7 References

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• Indian Telecommunications Industry Analysis Presentation | IBEF. (2021). IBEF.

https://www.ibef.org/industry/indian-telecommunications-industry-analysis-

presentation

• Bk, S. (2022, March 10). India - Telecom Reforms & The Way Forward. Conventus

Law. https://conventuslaw.com/report/india-telecom-reforms-the-way/

• Sunil Bharti Mittal Speaks On The Government’s Relief Package For The Telecom

Sector | CNBC TV18. (2021, September 16). [Video]. YouTube.

https://www.youtube.com/watch?v=GMJU5hQhq30

• Telecom Statistics India-2020 | Department of Telecommunications | Ministry of

Communication | Government of India. (2020). DOT.

https://dot.gov.in/reportsstatistics/telecom-statistics-india-2020

• Telecom, E. T. (2022, March 28). Airtel CTO urges regulator for affordable spectrum

pricing ahead of Trai’s 5G recommendations. ETTelecom.Com.

https://telecom.economictimes.indiatimes.com/news/airtel-cto-urges-regulator-for-

affordable-spectrum-pricing-ahead-of-trais-5g-recommendations/90484071

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