TECH SUPPLIER Apr 2021 - Market Analysis Perspective - Doc # AP47370521

Market Analysis Perspective: India Spectrum Auctions and Mobile Market Updates, 2021

By: Shiv Putcha

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Abstract

Telecommunications connectivity spend has been resilient, but it is affected by the COVID-19 pandemic. IDC expects reduced spending, resulting in a 7.2% year-over-year (YoY) decline in 2020 and a sharp recovery to 4.3% YoY in 2021. Some green shoots of recovery, such as the tariff raises leading to increased average revenue per user (ARPU) and the improved financial health of communications SPs, are already visible. Spectrum auctions are planned for multiple frequencies in the 700, 800, 900, 1800, 2100, 2300, and 2500MHz bands in March 2021 as well as 5G spectrum in the 3.5GHz band in late 2021.

4G Long Term Evolution (LTE) will continue to be the primary platform for mobile broadband in India. IDC expects 4G mobile connections' share to increase from 59% in 2019 to 96% in 2024, making LTE the dominant technology. The proliferation of low-cost voice over LTE (VoLTE)–enabled 4G feature phones means that LTE will be essential in delivering both voice and data services. Most of the growth will come from the migration of 2G users to affordable 4G devices and plans.

Having a limited scale over the forecast years and representing only 3% of the total mobile connections by 2024, India is simply not ready for 5G. The ongoing financial turmoil in the sector, the high spectrum prices, the suboptimal quantum of spectrum, and an unclear road map will dent operators’ deployment plans. India's mass market opportunity will also mean that the 5G device ecosystem has to evolve locally to supply competitively priced devices.

The spectrum auctions represent a positive movement for India’s telecom sector despite expectations of a lukewarm bidding. However, there is plenty of work to do if the next 5G auction needs to be impactful. India takes a proactive and progressive policy intervention from both the government and its regulator. The National Digital Communications Policy of 2018 is a good start, but relevant policy specifics must still be implemented to not only catalyze the sector but also ensure its survival. Indeed, time is of the essence.


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