4G. 4G subscriber base in India to cross 800-million mark this fiscal: Crisil

Notwithstanding the slowdown in subscriber addition due to the pandemic, the 4G subscriber base in India is expected to cross 800 million by March 2022. According to Crisil, 4G subscriber additions this fiscal will be more than in the last fiscal because of higher competitive intensity in the sector. The research company said that India’s 4G subscriber base is expected to have risen to 710-720 million in fiscal 2021 compared to 645 million in 2020.

Crisil said with the onset of the second wave of the pandemic and the resultant restrictions, there is once again reverse migration of labour. That could mean another quarter of subscriber churn. Also, given the restrictions in major cities, smartphone sales are likely to be impacted as well, which would slow 4G subscriber additions in the current quarter.

But the pace of additions should pick up gradually over the remainder of this fiscal as competitive intensity in the wireless-telecom market increases. "In this scenario, our bull case is 4G subscribers rising to ~820 million by the end of this fiscal, assuming restrictions last only for the current quarter. In the bear case, where lockdowns extend through the second quarter, we see that number reaching ~800-810 million," Crisil said.

"The acquisition of spectrum by telcos in March 2021 auction has led to three major players — Airtel, Jio and Vodafone Idea — almost achieving spectrum parity as they are now comparable in terms of MHz/million subscriber metric. Additionally, over the last two years, incumbent operators like Bharti Airtel and Vodafone Idea have re-farmed 3G spectrum for 4G use across a majority of circles, leading to significant 4G capacity addition," Crisil said.

It added that the current zero interconnect usage charges regime will push incumbent operators having 2G/3G operations to migrate to 4G-only network to reduce operating costs.

"Specifically, operators will focus on gaining/ retaining/ upgrading the 250-300 million active non-4G subscriber base, comprising mostly non-data users sporting feature phones. While competition to attract this user base did exist before, inadequate spectrum and 4G coverage made operators err on the side of caution," it said.

Crisil ruled out a price war, competition is expected to be indirect, in the form of tie-ups with smartphone manufactures for low-cost phones, increased bundling of over the top (OTT) content and lower entry points for upgrade customers.

"The build-up in competitive intensity also indicates that the industry is unlikely to see unanimous tariff hikes at least in the near term, limiting a large upside in average revenue per user (ARPU) in fiscal 2022. However, individual players will most likely increase tariffs on selected plans given their immediate need to improve ARPU. While all players agree that tariff hikes are paramount, they have differing levels of urgency to implement the hikes," it said.

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