The Indian telecom sector has a lot of room for growth in the consumer business. Telcos are focused on increasing the prices of mobile plans to improve their ARPU (average revenue per user). But it is not the only way telcos will notice ARPU improvement in wireless mobile services. Many consumers will increase their data consumption as digitisation gets a push, resulting in more recharges in a quarter. Then users will be paying extra for consuming 5G services and OTT (over-the-top) bundled prepaid packs. But one way through which the telcos can see their ARPU go upwards is by converting 2G customers to 4G/5G.
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2G Still a Big Part of India
2G is still very much a big part of India. Despite the high availability of 4G and 5G in the country, millions of customers still use 2G. There are about 250 million 2G customers in India still. There could be many reasons for this. One is that many users still consume mobile internet through a feature phone that supports legacy networks. While there are 4G feature phones, people still tend to continue to use their old feature phones that only support up to 2G/3G networks.
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A recent GSMA report said that globally, there were about 600 million users who were using a feature phone to consume mobile internet at the end of 2022. This is an area where smartphone OEMs (original equipment manufacturers) can tap into to increase their market share and enable consumers to access high-speed network services.
Reliance Jio, in fact, launched the Jio BharatPhone platform in India a few months back to offer customers a super affordable 4G feature phone that supports UPI payments and more. The feature phones under the Jio BharatPhone platform start at Rs 1000 mark, which is ultra-affordable in India. But the Jio BharatPhone platform has super affordable prepaid plans. It won't necessarily drive up the ARPU for the telco but will aid in increasing its market share.
Vodafone Idea (Vi) and Bharti Airtel need to figure out a way to convert their 2G customers into 4G/5G customers. That will help the telcos in increasing their revenues significantly and also reduce costs. Right now, Airtel and Vi have to spend a lot of money to run and maintain 2G networks. But their returns are actually very low.
Airtel partnered with many OEMs to offer subsidies on recharges on the purchase of select smartphones. Bharti Airtel is already looking to target the rural parts of the country by increasing its investment there and launching high-speed networks. The availability of 4G and 5G may push consumers on 2G networks to upgrade.
