The Indian telecom sector saw some major policy changes in 2021 which promise to reset the growth trajectory and generate revenues for the industry. The recent reforms announced by the government has brought relief for the cash-strapped sector, which will in turn promote investments in 5G equipment.

As per a Deloitte estimates, India is poised to have one billion smartphone users by 2026. Over the next five years, India’s captive consumption of smartphones will total to 1.7 billion, thereby taking this industry to a cumulative size of over $250 billion during the period 2021-2026. This growth will result in over 75 per cent of the subscribers using smartphones by 2026 from the sub-70 per cent as on date.

As per Deloitte, the adoption of smartphones in the rural market will happen at a CAGR of 6 per cent over the next five years as compared to a CAGR of 2.5 per cent in the urban market. This is largely propelled by demand for internet services in the rural market with the adoption of e-learning, fintech and e-health platforms. Internet-enabled devices in the rural market will also get a push with the government’s plan to fiberise all villages by 2025 under the BharatNet programme.

5G will also play a crucial role to fuel this demand. 5G is expected to become the fastest adopted mobile technology due its diverse applications like high-speed gaming and remote healthcare. 5G services are expected to be launched later this year, with promising uptake during the first year of launch and a gradual Y-o-Y growth thereafter, boosting, in the process, 5G smartphone sales in India. 5G devices will account for 80 per cent of the devices being sold in 2026. Indian consumers will purchase 840 million 5G smartphones over the next five years.

Mobile network

With the advent of digitisation, there has been a tremendous increase in demand for services and applications which require high speed internet, low latency, and increased bandwidth. The evolution of the digital ecosystem and industry’s efforts to launch cheaper 5G handsets will completely phase out third generation mobile networks. 5G will also contribute to the sale of new smartphones due to replacement of previous generation devices. 5G will fuel an incremental sale of 135 million devices over the next five years.

The gaming industry and OTT will be two major areas to benefit from 5G, driven by the demand for seamless downloads and uninterrupted experience when it comes to entertainment. The Indian gaming industry is currently valued at $1.5 billion and is likely to treble by 20251. In addition to gaming, content is another area which has pushed smartphone sales. This growth can be further increased by adopting the vernacular market strategy to cater to the needs of approximately 80 per cent of the internet users who do not use English as their first language.

As we are on the cusp of revolutionising the networks with the launch of 5G, the question is on its auction prices and affordability, which are critical for its massive adoption and, thereby, growth in smartphones sales in India. Across price segments, 5G smartphone shipments are rising, contributing to increased availability and accessibility.

Handset manufacturers are looking forward to grabbing this massive opportunity, facilitated alongside by the various enablers including PLI schemes and the $10 billion incentive package to semi-conductor manufacturing rolled out by the government.

The writer is Partner and Telecom Sector Leader, Deloitte India

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