If things go well, it can be a good year for the Indian Telecom industry. While the operators are prepping for rolling out 5G services in the country, there is no way they would ignore their 4G subscribers.
In fact, India stands to be a major 4G market for at least the next two to three years until 5G is deployed in most parts of the nation. Thus, the operators will be focused on adding as many 4G subscribers as possible.
Since a large number of mobile subscribers in India use 2G or 3G SIMs, they will be soon looking to upgrade to 4G services when the telcos shut down older generation networks. This is where both Vodafone Idea and Bharti Airtel can gain plenty of subscribers.
Airtel and Vi Will Need to Make Efforts to Migrate 2G/3G Customers to 4G
Crisil Research, a ratings agency, believes that Airtel and Vi will need to make more efforts to covert their 2G and 3G customers to 4G. The telcos have been refarming their 3G spectrum for 4G. Thus users will need to shift to 4G networks very soon when the telcos shut down their 3G networks.
Both the operators can benefit a lot if the legacy network users switch to 4G this year. If the telcos can pull all their resources into providing 4G services only, they will reduce their operational costs that 2G and 3G entail. Further, the refarming of spectrum would allow the telcos to increase their 4G capacity meaning they can add more users without worrying about issues such as network congestion.
Currently, there are up to 300 million users in India that are using feature phones and have not upgraded to 4G devices. Since India has a plethora of options when it comes to low-cost or entry-level 4G devices, feature phone users can upgrade to 4G supportive devices very comfortably.
Also, the recent spectrum purchase will help the telcos in comfortably adding more subscribers. Post the auctions, all the private operators of the country now have plenty of spectrum in their bags to add new subscribers.
Crisil Research pointed out that the telcos will be competing with each other indirectly now. Instead of reduced price of the plans, users will see more bundled over-the-top (OTT) offers coming their way. Further, the industry will push for lower-level 4G entry points for the legacy network subscribers to subscribe to 4G services.
The ratings firm expects that if things stay bullish and the lockdowns are only limited to the April-June 2021 quarter, by the end of FY22, the industry would see the 4G subscriber base at 820 million. Even if things go wrong and the industry's fate turns bearish, the total 4G subscriber base would reach 800 million.
Reliance Jio can also benefit from the new 4G subscribers since the telco offers plans at the lowest tariffs. Jio’s network coverage is also better than Vi and Airtel’s network, which gives it an upper hand when the feature phone users in rural areas upgrade to 4G devices and 4G networks.