Indian telecom players to follow China's 5G call route says CLSA

CIOTechOutlook Team | Thursday, 15 September 2022, 08:48 IST

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According to a research report by CLSA Ltd, Indian mobile phone service providers will adopt China's 5G and industrial internet strategy.

The analysis claims that Reliance Jio and Bharti Airtel would further consolidate their market and produce an EBITA CAGR of 22–23% by FY25CL.

China and India have the world's two largest mobile bases, with a combined 2.78 billion (bn) subscribers.

The worldwide march to 5G accelerated with China launching SA 5G (standalone standard) in 2020, said the report.

Top operator China Mobile's 5G package users now comprise 53 per cent of its 967 million subscribers and network users doubled in the past year to 263 million.

According to CLSA, the 5G migration lifted the average revenue per user (ARPU) 10 per cent driven by higher data usage. SA 5G is also the foundation of China's industrial internet, the next big market driver, led by cloud, Internet of Things (IoT) and others which could grow 20-30 per cent YoY to contribute 13-27 per cent of telcos' 2022 revenues.

The CLSA said Reliance Jio targets SA 5G while Bharti 5G non standalone access (NSA) will reuse its dense 4G network.

The 5G handsets already make up 30 per cent of smartphone shipments and should reach 250 million by FY25.

In India, early 5G monetisation will be driven by top-end subscribers, a jump in network capacity and 5G-based enterprise and fixed wireless access (FWA) services.

The 5G FWA alone could bring in $5-9bn in annual revenue. Further, 5G will coincide with growing ARPU and market -share gains for Reliance Jio and Bharti Airtel, the report notes.

According to CLSA, significant smartphone and ARPU expansion should make India mobile into a $36 bn market by FY25.

In the past five years, 4G subscribers have tripled to 761 million while data traffic boomed 18 times, with Reliance Jio's affordable tariffs and digitisation providing support.

The sector also consolidated, with Reliance Jio and Bharti Airtel now making up 76 per cent of the market.

Reliance Jio is following Bharti Airtel's tariff hikes and sector ARPU is up 53 per cent in three years. But when adjusted for inflation, ARPU is 25 per cent below levels six years ago, the CLSA said.

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