Indian Market to Move Towards Bundled Home Broadband and Television Services: ICRA

On the other hand, the penetration of wireline broadband is low in the country as of now, and the subscriber base has not seen any meaningful traction over the years. As on September 2018, the subscriber base was only 18 million, accounting for less than 7% of the total households, much lower than 44% in Brazil and 99% in France. In the television segment, while the total penetration is around 66% of the total households, of this, around 65% are provided over a copper cable, on which the capability to provide high bandwidth services are limited and not fully developed.

ICRA states that “Internationally, in order to monetise the wired broadband networks (copper or FTTH) better, players in many mature markets like USA, UK, Germany offer integrated services – television, wireline services and home broadband through a single tariff plan, at a significant discount to the individual services. A similar trend is expected to play out in India as well.”

Indian Market to Move Towards Bundled Plans and Integrated Services

Already, some service providers are bundling wireline and television services, but ICRA expects that it would become a norm going forward. ICRA predicts that Indian market to move towards bundled plans, integrating wireline voice, home broadband and television services.

At present, the telecom industry generates revenues of Rs. 14,500 crore from wireline voice, home broadband and DTH services, with the combined ARPU of Rs 875. With bundling and higher competition, the pricing is expected to reduce significantly, by as much as 40-50%. High price elasticity and expanding demand for data mean wireline broadband subscriber base can witness strong growth, similar to what was observed for wireless broadband.

“Even at a penetration level of 30% of the households, this could translate into subscriber base of 100 million by FY2024, generating revenues to the tune of Rs. 80,000 crore. Correspondingly the revenue contribution from these services is expected to increase from the current 8% to around 30% on an expanded revenue base,” concluded Harsh Jagnani.

Lastly, ICRA stated the key watch-outs for the industry would be the extent of competitive intensity and the need for capex. As in case of wireless where the pricing levels have become non-remunerative, a similar impact on the wireline broadband remains a risk. Also, as of now, the industry has a fibre network of 17,20,000 route kms. Much deeper and wider penetration is required to be able to meet the envisaged FTTH demand, which will encumber the financials of the telcos.