YEAR IN REVIEW. M&As, RJio launch steal the show in 2016

For the telecom sector, 2016 was perhaps the most eventful year in recent history.

The year opened with the formal announcement of the country’s mobile subscriber base touching 1 billion after a string of M&As, focus on quality, Reliance Jio Infocomm (RJio) launching its services, while the demonetisation brought m-commerce to the fore.

“This year saw a number of major changes, with the biggest being on the M&A front, while the emergence of 4G can be termed as second biggest to happen in the country. The industry also saw data revenues moving to 25 per cent from about 5-7 per cent earlier, and this was the first year 4G handsets shipments exceeded that of 3G,” Videocon Telecom Chief Executive Officer Arvind Bali told

It was on January 6 that the Telecom Regulatory Authority of India (TRAI) formally announced that India had crossed the magical 1-billion user mark, a number reached in two decades of mobile operations in the country.

The growth, which came in due to the advent of affordable handsets and lowest tariffs, also cemented India as the fastest growing mobile market in the world.

Much ahead of the RJio launch, many of the operators – including Bharti Airtel, Vodafone India and Idea Cellular – who had launched 4G across select markets, began expanding the offerings across the country.

Many operators also slashed data and voice tariffs, in their attempt to garner a fair share of customers before RJio launch.

However, the much awaited launch of RJio services happened on September 5, with the company announcing free voice and data for first 90 days, which was later extended by another 90 days to March 2017. The Mukesh Ambani company went on to create many records including50 million customers in just 83 days, highest Internet traffic of 16,000 TB in a day.

In September, Reliance Communications (RCom) entered into a deal to acquire smaller rival Aircel, forming an entity with combined assets of ₹65,000 crore and nearly 200 million customers. RCom, which was in talks for an all-stock deal with Sistema Shyam Telecom (SSTL) and in turn a three-way merger (SSTL-Aircel-RCom) got approvals during the year.

During the year, RCom also entered into many spectrum trading and sharing agreements with RJio, while in December it signed a definite agreement to sell 51 per cent stake in its tower unit Reliance Infratel to global alternative asset manager Brookfield Infrastructure Group for ₹11,000 crore ($1.6 billion).

“The competitive dynamics of Indian telecom market became all the more intense following the entry of Jio. But more than competitiveness, this year also saw a focus on quality, the debate on free data and the government began looking for a telecom ombudsman,”Amresh Nandan, research director at Gartner said.

While the Department of Telecommunications (DoT) began its focus on quality of calls, the October spectrum auction was a failure with none of the 700 MHz sold, and the Government receiving bids worth only ₹65,789 crore.

The year 2017 holds a bigger promise for the sector, with the industry expecting a come back of landlines, data explosion and smartphones becoming a basic requirement as technologies such as 4G gain ground.

“In the 90s, India had very poor telephone penetration, and then we moved on to cellular. Now the big change I see is the comeback of landlines, which is necessitated by high-speed internet, games and video. Further, most of the towers would be connected by fibre in this year,” Videocon’s Bali said.

Now, only 15 per cent of towers in India are connected through fibre, compared with 75 per cent across the world. The country mostly uses microwave technology to connect towers.

“A number of things are in the pipeline, with DoT planning to roll out a new telecom policy by April 2017, formalisation of free data issues and operators will be looking at deployment of more fibre and increasing backhaul capacities,” Gartner’s Nandan said.

“Voice will still continue to have its space in 2017, despite the onslaught of data as many operators are providing bundled offers and prices of feature and smartphones would come down,” Rajan S Mathews, Director General at Cellular Operators Association of India said.

Will the technological advent of 2016 usher in 5G next year? The industry consensus is a big “no”. The first commercial launch globally is expected only by 2020 or later.