Leapfrogging into the telecom and digital age

Leapfrogging into the telecom and digital age

Published on :- January 15th, 2021

The Indian telecom industry services the second largest telecommunications market in the world, with over 1.17 billion telecom subscribers and 749 million internet users as of October 2020. Given the digital infrastructure that is getting built in India (e.g. Aadhar, IndiaStack, Digital payments and banking, Digital Health mission) access to telecom services becomes an essential need for citizens. How is India currently using its telecom services? Let's take a look.

Telecom Access and Gross Revenue

Most of our telecom subscribers make use of wireless services as opposed to wireline. The market for wireline in the second quarter of 2020 is only 1.7% of the total.

While there does appear to be some correlation between the subscriber base and revenue, shifts in gross revenue overall show more variation compared to the relative consistency of number of subscribers, especially post 2015.

Patterns of use:

Analysing the monthly average revenue per user (ARPU), enables us to understand patterns in usage of different services.

There has been a clear shift towards high use of data. Data began to contribute more to ARPU from the fourth quarter of 2019 onwards, where it made up 56%. In the second quarter of 2020, it made up the bulk of average revenue per user (77%).

Interestingly, rental revenue has gone from being the second largest component of ARPU to one of the smallest in 2020. It went from comprising 26% in the last quarter of 2019 to 0.89% in the first quarter of 2020.

Revenue from calls comprises a fairly small percentage of ARPU when compared to data and pre-2020 rental. However, it has increased in 2020 and comprised 17% in the second quarter of 2020.

The minutes of use per subscriber per month shows an increasing trend, having gone from 627 minutes in the first quarter of 2015 to 744 minutes in the second quarter of 2020.

Data usage:

India has both one of the highest rates of mobile data usage and one of the cheapest rates of data charges in the world. Data use has grown exponentially amongst subscribers in the past few years, especially from 2017 onwards.

Data consumption has continued to grow and does not show any signs of slowing down as of now. It has shown high gains in 2020, increasing by over 1GB in the second quarter from the first as compared to the smaller changes in MB in previous quarters.

The access and usage of telecom services looks robust and on an upswing in India today but these trends will remain sensitive to major price changes. While the ratio of urban to rural subscribers is at 629: 523 million as of October 2020, it must also be noted that rural India makes up 68.84% of the population. Considering the role digital access plays in the world of today, be it for accessing education, healthcare, food supplies or government schemes, it is critical to ensure that this access is uninterrupted and equitable.

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