According to TRAI ( TELECOM REGULATORY AUTHORITY OF INDIA), India’s internet user base grew 4.3% on-year in CY2021 to around 829.3 million after ongoing double-digit enlargement during 2015-20, witnessing the rising costs of the entry-level smartphones delaying down 2g to 4g mutations.
With a 40-45% fall in new mobile internet subscribers in 2022, the main reason is the jump in the base smartphone price, which is likely to infect 2023, too. Seeing the data, around $300 million loss of additional revenue is faced by telcos as 25 million new broadband users could have easily generated $1 of incremental monthly ARPU for the operators.
Fall In Mobile Internet in 2023
As the prices of smartphones are unlikely to drop in 2023, thanks to elevated component prices, currency volatility, and the war in Ukraine, the growth of India’s internet user base will stay undisturbed. Also, the recent curbs imposed by the US on the exports of advanced semiconductor and chip manufacturing equipment to China could worry the global supply chain.
It has been seen that the total internet user base saw a fall of 0.5% in the January-March period last year. The wireless internet user base remained static between December 2021 (802.72 million) and June 2022 (808.13 million).
It has been estimated that, till June-July 2023, the base price of smartphones will remain expensive, and the conversion rate of 2G to 4G will decline.
Fitch evaluates India’s top telcos to report 10.5% and 8.2% on-year expansion in remuneration and ARPU in 2023, approximated 16.4% and 12.9%, respectively, in 2022.
But the good news is, with the coming of 5G in India, smartphones will become more inexpensive by the end of 2023, driving 2G users to shift directly to 5G.
The current 5G smartphone base is at 70 million, and mobile data penetration is estimated to rise to a further 80% in March 2025. Also, the smartphone base will grow to 700 million by March 2025, propelling the 5G countrywide rollout by JIO and Airtel.
With all the expectations in the notebook, the 5G business case can be limited as most of the continued applications are working well with 4G, and 5G handset penetration in India will be less than 5%.
India’s top telcos can anticipate raising headline tariffs in CY2023, given the focus on profitability amid enterprise confederation.
