2023 was without a doubt the year that India made a lot of headlines with a 5G rollout that was impressive both in speed and scale. Both Reliance Jio and Bharti Airtel have spent heavily on capex for 5G network rollouts and achieved impressive early coverage and healthy subscriber adoption.

2024 promises to be another benchmark year for India, with the passing of the Telecommunications Bill of 2023 last December. The new law breaks decisively away from the previous policy regime, which was rooted in the Indian Telegraph Act of 1885 and creates a new policy foundation for enabling the growth of digital infrastructure and services in India. The new law merits lengthy discussion, but this article focuses on the 2024 outlook for telecoms and digital infrastructure in India.

India’s Digital Divide will contract significantly in 2024

India is the world’s most populous nation, with a little over 1.4 billion people and counting. As of October 2023, India had 1.15 billion mobile connections which translates to a penetration rate of 82.5%. The headline connections and penetration rate figures mask some nuances but bottom line, there is still significant room for growth in connections with potential for nearly three hundred million new connections.

Where will this growth come from?

India’s mobile operators, specifically Jio and Airtel, continue to set the pace with a near duopolistic stranglehold on market and revenue share. India’s other two operators, Vodafone-IDEA, or Vi, and BSNL have fallen long and hard from their previous positions, and 2024 will be a crucial year for their revival plans.

Beyond voice, the really big dent on the Digital Divide will come from 5G fixed wireless access (FWA) services for broadband. Mandala Insights has projected this market to rise from an initial 308,000 in 2023 to 36.6 million by the end of 2028. The majority of these connections will be on the sub-6 GHz 5G spectrum frequencies, with mmWave getting traction from 2025 onwards.

2024 will also see increasing momentum behind satellite connectivity, which received a major boost when India chose to make spectrum available for these services through administrative allocation, as opposed to an auction mechanism. Low earth orbit (LEO) constellations by Eutelsat’s OneWeb (Bharti Airtel remains a stakeholder) and the Elon Musk-backed Starlink constellation are front runners while Jio’s SpaceFiber (in collaboration with SES) service is a medium earth orbit (MEO) constellation and is also in the running for an early launch in 2024. To be clear, in the short term, satellite connectivity will be all about data as opposed to voice communications, as direct to device (D2D) connectivity is not yet primetime.

Monetization will be the key mantra, across consumer and enterprise segments

Since Reliance Jio’s entry into the Indian market in 2016, the market has seen its fair share of highs and lows. There has been a surge in smartphone adoption and mobile data growth, but much of the latter was not “monetized” as Jio’s strategy of bundling large amounts of data into their plans drained significant value away from the competition and depressed ARPUs.

While India has seen modest increases in mobile tariffs over the last two years, it is still one of the most affordable markets in the world, with ARPUs hovering below $2.50 per month, which covers voice and data bundles of 20GB and higher. A bargain for consumers but a headache for operators. 2024 will see a shift away from these rock bottom prices as operators, likely led by Airtel, continue to push, and probe with new packages that will aim to raise ARPUs by up to INR 100 per month on average. This is especially crucial for Indian operators looking to monetize their massive investments into 5G network deployment. 

Beyond consumer tariffs, India will also see significant growth on the enterprise front. The first driver is private 5G, long held back by the lack of spectrum for enterprises. Enterprises will be allowed to “lease” spectrum from operators with the freedom to choose their own systems integrators or opt for a fully managed service through operators, with a host of new use cases supported.

Second, the digital transformation of Indian enterprises is gaining momentum, with many embracing cloud solutions, public and private, as well as emerging technologies like GenAI and more. This growth is increasingly multi-cloud and on-premises, requiring investments in SD-WAN as well as dedicated connectivity.

Third, IoT is poised for growth for operators, with an increasingly vertical approach leading to major deals with utilities for smart meters, to cite one example.

Digital transformation will create opportunities for new digital infrastructure players

India is seeing headline economic growth, a slew of groundbreaking digital services for public and private use cases, and steady growth in logistics and connectivity. Two recent examples of Government-led initiatives are a case in point, “FastTag” for automated toll payments across India, and the Open Network for Digital Commerce, which is being set up as a “middleware” platform to create a national marketplace that incorporates both large stores as well as e-commerce offerings from smaller players and even SMEs. 

In practice, a rapidly digitizing economy has meant a surge of investments in data centers, public cloud, and edge computing. The continued retreat of telecom operators from the infrastructure space is matched by rising investments by digital infrastructure players like Brookfield and Digital Realty. This new category of digital infrastructure providers is also seeing interest from more traditional cloud providers, with the likes of Google Cloud and Amazon Web Services investing heavily in India and adding more “regions,” aided by rising subsea connectivity through major hubs like Mumbai and Chennai.

India is also seeing the rise of new players like Cloud Extel, a neutral host provider based in Mumbai. Neutral hosts can provide vital connectivity and capacity in high traffic areas like airports, train stations, malls and more that would not normally see the required level of investments from incumbents who are typically compelled to serve demand through their macro networks.

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