India’s 4G Subscriber Base may Grow to 820 Million in FY22, Says Crisil

Despite a COVID-19 increase, India’s 4G user base is projected to increase to around 820 million in FY22, according to Crisil Research. The Big 3 telcos are expected to use their newly acquired airwaves to improve coverage and drive the country’s remaining 250-300 million feature phone users to upgrade to 4G.

The growth in the subscriber base is attributed to increased competitive intensity as a result of major spectrum purchases by the big telcos in the March 2021 auction, which resulted in Bharti Airtel, Reliance Jio, and Vodafone Idea gaining spectrum parity in terms of Mhz/million subscriber.

According to the report, there is a market of 250-300 million active non-4G subscribers who will be on telcos’ target list for conversion to 4G users in order to boost revenues.

Though demand to attract this user base existed previously, operators erred on the side of caution due to a lack of spectrum and 4G coverage, it said, noting that with the recent spectrum acquisition, telcos are well-positioned to manage any spike in data traffic, resulting in increased competitiveness by players to gain market share.

According to the report, indirect competition is expected to emerge from partnerships with mobile manufacturers for low-cost phones, expanded bundling of over-the-top (OTT) content, and reduced entry points for upgrade customers. An example of such move includes, Jio’s ‘JioPhone 2021’ plan, which include handsets and one and two years of unlimited calling for Rs. 1,499 (US$ 20.04) and Rs. 1,999 (US$ 26.73), respectively.

Individual players are likely to raise tariffs on specific plans in order to boost ARPU. While all players accept that tariff increases are necessary, the urgency with which they are implemented varies.

As per the study, the emergence of the second wave of the pandemic, as well as the resulting restrictions, has resulted in a shift of labour migration. Furthermore, given the restrictions in major cities, smartphone sales are likely to be affected, restricting 4G subscriber additions in the current quarter.

As per the report, in the best-case scenario, 4G subscribers are expected to increase to 820 million by the end of FY22, up from 720 million at the end of FY21, if the current quarter’s restrictions are lifted. The number are expected to reach 800-810 million in other case, where lockdowns extend until the second quarter.

Source: IBEF