There were 616 million unique mobile users in India, by the end of June 2016 with at least 1 billion mobile connections (SIM cards) at the same time, according The Mobile Economy Report 2016 (pdf) compiled by Global System Mobile Association (GSMA). This makes India the second largest mobile market in the world, while GSMA estimates that the number of unique users will touch 951 million with around 1.4 billion mobile connections by 2020.
In addition, only 15% of the 616 million mobile users are on mobile broadband as of 2015.This is expected to touch 48% by 2020 in the country, signalling that close to half of mobile users will be connected to the internet via cellular networks. India is also the second largest smartphone market with 238 million smartphone users; this is expected to touch 688 million by 2020, according to GSMA.
Note that India accounts for more than a quarter of mobile connections in Asia Pacific, with over 1 billion connections, while the 616 million users translates to a mobile network penetration of 47% as of 2015. Improving affordability, falling device prices and better network coverage aided by operator investments, together with positive policy support and healthy macro-economic conditions, will help deliver over 330 million new unique subscribers by 2020, added the report.
4G LTE networks in India have seen a “sluggish growth” since its deployment in 2012 due to the lack of affordable spectrum in the sub-GHz spectrum bands, the report said. Note that in this year’s spectrum auctions saw no takers for the premium 700 MHz band which has been considered crucial for 4G LTE adoption. By the end of 2015, India had just 3 million 4G connections which is expected to increase to 280 million by 2020, the report said.
In India, 2G connection base remains the highest with over 800 million connections as of 2016, while 3G has around 200 million connections in the same year. The 2G base is expected to fall to around 670 million by 2020, while 3G is projected to have over 350 million connections by that time. As pointed earlier, mobile broadband (3G and 4G) will account for under 50% of total connections in India by 2020; while the APAC regions is set to have a mobile broadband penetration rate of over 70% by then. “A key driver of broadband uptake, and particularly 4G, will be the timely release of affordable spectrum to meet rapidly growing demand,” GSMA said in the report.
Data consumption rates and user behavior
The report said that between 2014 and 2015, mobile data traffic in India increased by 89%, with Indians consuming around 150 Petabytes (PB) of mobile data per month in 2015, which is equal to around 37 million DVDs. As more users onboard on mobile broadband, data consumption is expected to grow 12-fold between 2015 and 2020, with a Compound Annual Growth Rate (CAGR) of 63%. This is ahead of growth projected in the entire APAC region with is forecasted at 54% CAGR.
Surveys conducted by GSMA shows that the around 80% of adult respondents aged between 18 to 54 use Internet based messaging apps like WhatsApp, Viber, etc., more frequently than traditional text messaging. However, voice services offered by telecom companies in India, will continue to contribute for more than 3/4th of recurring revenues for the top three operators. This is because the increasing use of online messaging services and other digital forms of content consumption will further contribute to revenues in form of data consumption, added GSMA.
Competition in the mobile market
India remains as one of the most competitive mobile markets in the world while in the last few years (2011-2015), financial performance in the sector in terms of EBITDA margins was up by 14% points, according to GSMA. However, the Indian market’s overall EBITDA margin stood at 33% in 2015, while this margin is still lesser than its neighbors including r as China, Bangladesh and Pakistan. “The Indian mobile market remains a two-tier market, with the larger players continuing to seek scale and build long-term viability while many of the smaller players continue to struggle,” added GSMA in the report.
In addition, even though more users are expected to onboard mobile broadband, mobile revenues are expected to show slight decline over the next few years, the report said. Note that India has one of the lowest Average Revenue Per User per subscriber level at just $3.8 per month in during Q2 2016. China’s ARPU stood at $10.9, while the entire APAC region had an ARPU of $11.2 during the same quarter. Voice prices or cost of talktime in India “have largely bottomed out in India” GSMA said. The effective price per minute is considered the lowest in the APAC region at $0.01 compared to a regional average of $0.02.