The year 2020 was a year of uncertainty and change, but one sector that emerged as the greatest enabler is the telecom sector with its uninterrupted services, driving nationwide efforts in the fight against the pandemic.
Telcos stepped up efforts to empower people, start-ups and small and medium enterprises to replace physical dependencies with digital infrastructure — aiding in remote working, online learning, on-demand entertainment, healthcare advisory and public safety.
The three private operators — Bharti Airtel, Reliance Jio and Vodafone Idea — and the two State-owned ones — Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL) — have been playing pivotal roles in ensuring uninterrupted connectivity to all.
Initially, when the nation imposed complete lockdown, the telecom industry was also hit, with a sharp fall in subscribers — around 2.8 million in March and 8.2 million in April. But as businesses and customers adapted to new ways of living after the complete lockdown, telecom regrew while almost all other infrastructure services remained affected, SP Kochhar, Director General, Cellular Operators Association of India (COAI), told BusinessLine.
At northwards of 11GB per user per month, a 30 per cent uptick in data consumption in the past months, fast-tracked the usage by four-five years into the future. The relentless focus on augmenting network capacity and the undaunting efforts of telecom field force and network engineers was instrumental in managing the surge and keeping ‘India connected’, said experts tracking the industry.
Going forward in 2021, the sector is now headed for an auction of spectrum in the next quarter, and will also lead to tariff hikes by the players because of network investment compulsions, they said.
The government is also investing heavily in strengthening telecom infrastructure by laying submarine cable to connect islands to the mainland and setting up more towers in rural and unconnected areas.
But, given the sector is in duress, the financial health of telcos necessitates an upward revision of tariffs, said Prashant Singhal, EY Emerging Markets Technology, Media & Entertainment and Telecommunications (TMT) Sector Leader.
“An enabling regulatory framework supporting a tariff reset will go a long way in improving sustainability, promoting orderly growth and facilitating investments in building digital infrastructure,” he said.
With right accelerators, the telecom industry is well positioned to drive the next broadband revolution and enable the lives of 1.3 billion Indians on broadband highways, he added.
The industry veterans also said the impending industry-wide tariff hike will improve financial metrics of companies and 2021 could well turn out to be a year of significant industry repair.
Airtel and Voda-Idea may only bid for airwaves for renewal of their licences. For instance, Airtel may bid for renewing expiring spectrum across 900 and 1800 MHz bands, given its spectrum holdings through mergers and acquisitions over the last three years.
Jio, on the other hand, may purchase additional spectrum as it looks to augment its network capacity having garnered 35 per cent subscriber market share and a much higher share of traffic, according to a report by Credit Suisse.
“The auctions are expected to fetch ₹55,000–60,000 crore to the exchequer and even at this participation, the industry will have to shelve out around ₹20,000-25,000 crore upfront, while the balance will have to be paid over 16 years, after a two-year moratorium,” Ankit Jain, Assistant Vice-President, ICRA Limited, said.
ICRA expects moderate participation in the upcoming spectrum auctions, largely limited to renewal of the expiries, primarily in the 800 MHz and 1800 MHz bands, along with some consolidation of spectrum holdings. It does not foresee any major participation in the 700 MHz band.
To be held in March, the auction will be for spectrum in 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz frequency bands and a total of 2251.25 MHz is being offered with total valuation of ₹3.92 lakh crore (at reserve price).
However, the auctions won’t include spectrum bands that support 5G services, which can play a crucial role in supporting emerging technologies like AI that hold potential to add over ₹7,000 crore to the economy by 2035.
“The auction of spectrum will further help in telecom and broadband penetration and the money generated from spectrum auctions will help the government pump more money into the economy,” Sandeep Aggarwal, Head of Telecom Committee at PHDCCI, said.
Similarly, the setting up of the National Security Committee on Telecom is a step in the right direction to boost India’s national security, he said.
5G test runs
In 2021, the industry will also see some more test runs of 5G, and Reliance Jio has also hinted at rolling out 5G telecom services in the second half. Mukesh Ambani, Chairman of RIL, also said that Jio was developing indigenous 5G solutions.
There will be increased focus on 5G deployment strategies and development of India-relevant 5G use cases. However, restrictions on Chinese players like Huawei and ZTE participating in the trials may continue in the coming year because of the ongoing border tensions.
More clarity may emerge once the government forms the National Security Committee, which will list ‘trusted and non-trusted’ equipment/ devices by vendors, to be used by the telecom service providers.
In this while, European telecom equipment makers such as Nokia and Ericsson may gain momentum as they have started manufacturing 5G gears in India and exporting them to countries where the services have started.