India’s telecom industry has grown at a phenomenal pace since last decade and half. The continuous growth in the sector is contributing substantially towards the Indian economy. India currently stands at second spot in global telecom market, with subscriber base of over 106 crore. The sector is likely to provide direct and indirect jobs to more than four million people over the next five years on the back of government’s efforts to increase penetration in rural areas coupled with the rapid surge in smartphone sales and increasing internet usage.
Total telephone subscribers
The number of telephone subscribers in India declined from 1,059.86 million at the end of June-16 to 1,058.85 million at the end of July-16, thereby showing a negative monthly growth of 0.10%. The urban subscription increased from 609.45 million at the end of June-16 to 610.22 million at the end of July-16 whereas the rural subscription declined from 450.41 million to 448.63 million during the same period. The monthly growth rates of urban and rural subscription were 0.13% and -0.40% respectively.
The overall Tele-density in India declined from 83.20 at the end of June-16 to 83.04 at the end of July-16. The Urban Tele-density declined from 153.22 at the end of June-16 to 153.18, and the Rural Tele-density also declined from 51.41 at the end of June-16 to 51.17 at the end of July-16. The share of urban subscribers and rural subscribers in total number of telephone subscribers at the end of July-16 was 57.63% and 42.37% respectively.
Wireless subscribers
Total wireless subscriber base declined from 1,035.12 million at the end of June-16 to 1,034.23 million at the end of July-16, thereby registering a negative monthly growth of 0.09%. The Wireless subscription in urban areas increased from 588.78 million at the end of June-16 to 589.61 million at the end of July-16, whereas wireless subscription in rural areas declined from 446.33 million to 444.63 million during the same period. The monthly growth rates of urban and rural wireless subscription were 0.14% and -0.38% respectively.
Out of the total wireless subscriber base (1,034.23 million), 919.28 million wireless subscribers were active on the date of peak VLR in the month of July-16. The proportion of active wireless subscribers was approximately 88.88% of the total wireless subscriber base. Punjab service area recorded the highest growth rate in wireless subscribers during the month of July-16, whereas J&K service area showed maximum decline in wireless subscribers.
The Wireless Tele-density in India declined from 81.26 at the end of June-16 to 81.11 at the end of July-16. The Urban Wireless Tele-density slightly declined from 148.03 to 148.00 at the end of July-16, and Rural Wireless Tele-density too declined from 50.95 to 50.72 during the same period. The share of urban and rural wireless subscribers in total number of wireless subscribers was 57.01% and 42.99% respectively at the end of July-16. As on 31st July, 2016, the private access service providers held 90.88% market share of the wireless subscribers whereas BSNL and MTNL, the two PSU access service providers, had a market share of only 9.12%.
Wireline Subscribers
Wireline subscriber base declined from 24.74 million at the end of June- 16 to 24.62 million at the end of July-16. Net decline in the wireline subscriber base was 0.13 million with a monthly decline rate of 0.51%. The shares of urban and rural subscribers in total wireline subscribers were 83.74% and 16.26% respectively at the end of July-16. The Overall Wireline Tele-density declined from 1.94 at the end of June-16 to 1.93 at the end of July-16. Urban Wireline Tele-density and Rural Wireline Tele-density worked out to be 5.17 and 0.46 respectively. BSNL and MTNL, the two PSU access service providers, held 71.18% of the wireline market share.
Mobile Number Portability (MNP)
In the month of July-16, a total of 4.91 million requests were received for MNP. With this, the cumulative MNP requests increased from 224.43 million at the end of June-16 to 229.34 million at the end of July-16, since the implementation of MNP. In MNP Zone-I (Northern and Western India), the highest number of requests have been received in Rajasthan (about 19.48 million) followed by Gujarat (about 17.15 million). In MNP Zone-II (Southern and Eastern India), the highest number of requests till date have been received in Karnataka (about 25.28 million) followed by Andhra Pradesh (about 21.42 million).
Broadband
The number of broadband subscribers increased from 159.80 Million at the end of June- 16 to 166.96 million at the end of July-16 with a monthly growth rate of 4.48%. Top five service providers constituted 84.83% market share of the total broadband subscribers at the end of July-16. Bharti Airtel (44.41 million), Vodafone (33.36 million), Idea Cellular (28.19 million), BSNL (20.92 million) and Reliance Communications Group (14.74 million).
As on July 31, 2016, the top five Wired Broadband Service providers were BSNL (9.86 million), Bharti Airtel (1.88 million), MTNL (1.08 million), Atria Convergence Technologies (1.05 million) and YOU Broadband (0.57 million). As on 31st July, 2016, the top five Wireless Broadband Service providers were Bharti Airtel (42.53 million), Vodafone (33.36 million), Idea Cellular (28.19 million), Reliance Communications Group (14.63 million) and BSNL (11.07 million).
Impact of GST on the Telecom sector
The Goods and Services Tax (GST), the biggest reform in India’s indirect tax structure since the economy began to be opened up 25 years ago, will be have mixed impact on different sectors including telecom, a sector which today is India’s largest contributor of service tax, it will have a bit negative impact, making it costlier from April 2017.
Currently, a customer pays service tax of 15% (including cess) on his telephone/ mobile bills, while the final rate of GST is yet to be decided. It is likely to be around 18-20%. In all cases, the monthly mobile bills are set to rise and talk time for pre-paid recharges will go down. The telecom operators are expected to pass through the additional tax burden to end consumers. However, GST is aimed to simplify tax structure and because of it, operators will benefit from cost efficiencies. Telcos will get input tax credits in the medium term, and they might reduce the overall cost of their services.
Recent developments
India’s biggest spectrum auction gets muted response India’s biggest auction of telecom spectrum, closed just after five days and 31 rounds of bidding with bids worth about only Rs 65,789 crore being received for 965 Mhz of spectrum, out of total 2,354.55 Mhz put for auction and against expectation of Rs 5.6 lakh crore. This was about 40 per cent of the total worth of spectrum that was placed on the block, leaving nearly 60 percent of airwaves, including premium 4G bands, unsold. The spectrum auction last year had lasted for 19 days and attracted bids worth Rs 1.1 lakh crore. During the course of the five days there were no takers for the premium 700Mhz and 900 Mhz bands, mainly because of high reserve price set by the government. The 700MHz band alone was expected to fetch Rs 4 lakh crore for the government. Companies winning spectrum in frequency bands above 1Ghz -- 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 MHz -- will have to make 50 percent upfront payment, while the rest can be paid in 10 years after a two-year moratorium, this means that the government would get about Rs 32,000 crore in upfront payment. Seven operators were in the fray includes Reliance Jio, Bharti Airtel, Vodafone, Idea Cellular, Tata Teleservices, Reliance Communications and Aircel. Vodafone emerged as the highest bidder with bids worth over Rs 20,000 crore, followed by Airtel at Rs 14,244 crore. Newcomer Reliance Jio won airwaves across key 4G bands for Rs 13,672 crore. Idea procured 349.2 MHz of spectrum for Rs 12,798 crore securing additional airwaves in 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands.
TRAI asks DoT to impose Rs 3,050 crore fine on Telecos
In a setback to incumbent telecom operators, sector regulator Telecom Regulatory Authority of India (TRAI) has suggested imposing Rs 3,050 crore penalty on Bharti Airtel, Vodafone and Idea for allegedly denying interconnectivity to newcomer Reliance Jio. TRAI, in its recommendation to the Department of Telecom, said it has found the trio to be non-compliant with licence conditions and service quality norms given the high rate of call failures and congestion at interconnect points for RJio. As per TRAI’s recommendation, the penalty for Airtel and Vodafone works out to about Rs 1,050 crore each, while in case of Idea Cellular it comes to about Rs 950 crore. The regulator stopped short of recommending cancellation of their telecom licences saying it may lead to ‘significant consumer inconvenience’. The recommendation came on complaint by Reliance Jio that over 75 per cent of calls on its network are failing as incumbents were not giving sufficient points of interconnect that would help complete calls.
Outlook
Indian telecom industry is ringing loud since past several years and stood at second spot in global market. The rapid growth of Indian telecom sector is contributing substantially to India’s gross domestic product (GDP). Government initiatives like Unified Licence for telecom operations and Public-Private Partnership (PPP) model for BharatNet are providing support to the telecom sector. Though, the recent spectrum auction turned out a big disappointment. The major portion of spectrum did not find any buyers due to serious miscalculation by the regulator and the government of India. However implementation of GST may play spoil sport for the sector, as the new act will put pressure on whole service industry, with higher incidence of taxes.
Total telephone subscribers
The number of telephone subscribers in India declined from 1,059.86 million at the end of June-16 to 1,058.85 million at the end of July-16, thereby showing a negative monthly growth of 0.10%. The urban subscription increased from 609.45 million at the end of June-16 to 610.22 million at the end of July-16 whereas the rural subscription declined from 450.41 million to 448.63 million during the same period. The monthly growth rates of urban and rural subscription were 0.13% and -0.40% respectively.
The overall Tele-density in India declined from 83.20 at the end of June-16 to 83.04 at the end of July-16. The Urban Tele-density declined from 153.22 at the end of June-16 to 153.18, and the Rural Tele-density also declined from 51.41 at the end of June-16 to 51.17 at the end of July-16. The share of urban subscribers and rural subscribers in total number of telephone subscribers at the end of July-16 was 57.63% and 42.37% respectively.
Wireless subscribers
Total wireless subscriber base declined from 1,035.12 million at the end of June-16 to 1,034.23 million at the end of July-16, thereby registering a negative monthly growth of 0.09%. The Wireless subscription in urban areas increased from 588.78 million at the end of June-16 to 589.61 million at the end of July-16, whereas wireless subscription in rural areas declined from 446.33 million to 444.63 million during the same period. The monthly growth rates of urban and rural wireless subscription were 0.14% and -0.38% respectively.
Out of the total wireless subscriber base (1,034.23 million), 919.28 million wireless subscribers were active on the date of peak VLR in the month of July-16. The proportion of active wireless subscribers was approximately 88.88% of the total wireless subscriber base. Punjab service area recorded the highest growth rate in wireless subscribers during the month of July-16, whereas J&K service area showed maximum decline in wireless subscribers.
The Wireless Tele-density in India declined from 81.26 at the end of June-16 to 81.11 at the end of July-16. The Urban Wireless Tele-density slightly declined from 148.03 to 148.00 at the end of July-16, and Rural Wireless Tele-density too declined from 50.95 to 50.72 during the same period. The share of urban and rural wireless subscribers in total number of wireless subscribers was 57.01% and 42.99% respectively at the end of July-16. As on 31st July, 2016, the private access service providers held 90.88% market share of the wireless subscribers whereas BSNL and MTNL, the two PSU access service providers, had a market share of only 9.12%.
Wireline Subscribers
Wireline subscriber base declined from 24.74 million at the end of June- 16 to 24.62 million at the end of July-16. Net decline in the wireline subscriber base was 0.13 million with a monthly decline rate of 0.51%. The shares of urban and rural subscribers in total wireline subscribers were 83.74% and 16.26% respectively at the end of July-16. The Overall Wireline Tele-density declined from 1.94 at the end of June-16 to 1.93 at the end of July-16. Urban Wireline Tele-density and Rural Wireline Tele-density worked out to be 5.17 and 0.46 respectively. BSNL and MTNL, the two PSU access service providers, held 71.18% of the wireline market share.
Mobile Number Portability (MNP)
In the month of July-16, a total of 4.91 million requests were received for MNP. With this, the cumulative MNP requests increased from 224.43 million at the end of June-16 to 229.34 million at the end of July-16, since the implementation of MNP. In MNP Zone-I (Northern and Western India), the highest number of requests have been received in Rajasthan (about 19.48 million) followed by Gujarat (about 17.15 million). In MNP Zone-II (Southern and Eastern India), the highest number of requests till date have been received in Karnataka (about 25.28 million) followed by Andhra Pradesh (about 21.42 million).
Broadband
The number of broadband subscribers increased from 159.80 Million at the end of June- 16 to 166.96 million at the end of July-16 with a monthly growth rate of 4.48%. Top five service providers constituted 84.83% market share of the total broadband subscribers at the end of July-16. Bharti Airtel (44.41 million), Vodafone (33.36 million), Idea Cellular (28.19 million), BSNL (20.92 million) and Reliance Communications Group (14.74 million).
As on July 31, 2016, the top five Wired Broadband Service providers were BSNL (9.86 million), Bharti Airtel (1.88 million), MTNL (1.08 million), Atria Convergence Technologies (1.05 million) and YOU Broadband (0.57 million). As on 31st July, 2016, the top five Wireless Broadband Service providers were Bharti Airtel (42.53 million), Vodafone (33.36 million), Idea Cellular (28.19 million), Reliance Communications Group (14.63 million) and BSNL (11.07 million).
Impact of GST on the Telecom sector
The Goods and Services Tax (GST), the biggest reform in India’s indirect tax structure since the economy began to be opened up 25 years ago, will be have mixed impact on different sectors including telecom, a sector which today is India’s largest contributor of service tax, it will have a bit negative impact, making it costlier from April 2017.
Currently, a customer pays service tax of 15% (including cess) on his telephone/ mobile bills, while the final rate of GST is yet to be decided. It is likely to be around 18-20%. In all cases, the monthly mobile bills are set to rise and talk time for pre-paid recharges will go down. The telecom operators are expected to pass through the additional tax burden to end consumers. However, GST is aimed to simplify tax structure and because of it, operators will benefit from cost efficiencies. Telcos will get input tax credits in the medium term, and they might reduce the overall cost of their services.
Recent developments
India’s biggest spectrum auction gets muted response India’s biggest auction of telecom spectrum, closed just after five days and 31 rounds of bidding with bids worth about only Rs 65,789 crore being received for 965 Mhz of spectrum, out of total 2,354.55 Mhz put for auction and against expectation of Rs 5.6 lakh crore. This was about 40 per cent of the total worth of spectrum that was placed on the block, leaving nearly 60 percent of airwaves, including premium 4G bands, unsold. The spectrum auction last year had lasted for 19 days and attracted bids worth Rs 1.1 lakh crore. During the course of the five days there were no takers for the premium 700Mhz and 900 Mhz bands, mainly because of high reserve price set by the government. The 700MHz band alone was expected to fetch Rs 4 lakh crore for the government. Companies winning spectrum in frequency bands above 1Ghz -- 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 MHz -- will have to make 50 percent upfront payment, while the rest can be paid in 10 years after a two-year moratorium, this means that the government would get about Rs 32,000 crore in upfront payment. Seven operators were in the fray includes Reliance Jio, Bharti Airtel, Vodafone, Idea Cellular, Tata Teleservices, Reliance Communications and Aircel. Vodafone emerged as the highest bidder with bids worth over Rs 20,000 crore, followed by Airtel at Rs 14,244 crore. Newcomer Reliance Jio won airwaves across key 4G bands for Rs 13,672 crore. Idea procured 349.2 MHz of spectrum for Rs 12,798 crore securing additional airwaves in 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands.
TRAI asks DoT to impose Rs 3,050 crore fine on Telecos
In a setback to incumbent telecom operators, sector regulator Telecom Regulatory Authority of India (TRAI) has suggested imposing Rs 3,050 crore penalty on Bharti Airtel, Vodafone and Idea for allegedly denying interconnectivity to newcomer Reliance Jio. TRAI, in its recommendation to the Department of Telecom, said it has found the trio to be non-compliant with licence conditions and service quality norms given the high rate of call failures and congestion at interconnect points for RJio. As per TRAI’s recommendation, the penalty for Airtel and Vodafone works out to about Rs 1,050 crore each, while in case of Idea Cellular it comes to about Rs 950 crore. The regulator stopped short of recommending cancellation of their telecom licences saying it may lead to ‘significant consumer inconvenience’. The recommendation came on complaint by Reliance Jio that over 75 per cent of calls on its network are failing as incumbents were not giving sufficient points of interconnect that would help complete calls.
Outlook
Indian telecom industry is ringing loud since past several years and stood at second spot in global market. The rapid growth of Indian telecom sector is contributing substantially to India’s gross domestic product (GDP). Government initiatives like Unified Licence for telecom operations and Public-Private Partnership (PPP) model for BharatNet are providing support to the telecom sector. Though, the recent spectrum auction turned out a big disappointment. The major portion of spectrum did not find any buyers due to serious miscalculation by the regulator and the government of India. However implementation of GST may play spoil sport for the sector, as the new act will put pressure on whole service industry, with higher incidence of taxes.
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