The telecom sector is poised for a technological leap with the imminent roll-out of 5G and the recent roll-out of commercial satellite broadband. The proliferation of fast connectivity to rural and remote locations and the advent of fast, low-latency 5G could support many new use cases based on internet of things, artificial intelligence, cloud computing, robotics, etc. India is also looking to become a major host for data centres. Assuming proactive policy, there will be major investment opportunities across the telecom value chain and significant positive externalities flowing out of the sector.
India is the world’s second-largest telecom market in terms of subscriber base (1.2 billion) and it could see a jump in mobile broadband penetration with around 40 per cent of surfers expected to be on 5G by 2027. The first 5G networks are likely to roll out by Diwali and most towns will be connected by end 2023.
The 5G use cases range across domains as diverse as healthcare, education, agriculture, logistics, as well as retail and, of course, enterprise solutions. Satellite high-throughput services through the ISRO-Hughes tie-up will provide connectivity as well as cellular backhaul in inaccessible regions. This could be a force multiplier for commerce across the mountains of the north and the Northeast.
Supportive policy elements include the telecom reform package in 2021, the recent 5G spectrum auctions and changes in the licensing norms and fees for satcom. The reforms provided much-needed relief, covering the structural, procedural and liquidity aspects.
The 5G auctions and permission for private captive networks on 5G could open up an entirely new space. How the Adani Group fares in its new venture would set a template for other players to set up private 5G networks. Besides this, BharatNet targets putting every gram panchayat on broadband and the PM-Wani scheme will create fast public Wi-Fi all over the country.
There’s need for a fresh round of infrastructure investment as the new networks will require better backhaul, to be provided through fibre wherever that is feasible. That will be a major investment opportunity since it will require Rs 500 billion plus.
The recently announced amendments to the Indian Telegraph Right of Way (RoW) Rules, 2016 will help expedite upgrades of networks. These include rationalising administrative charges levied on operators for securing RoW permissions, introducing a single-window clearance for approvals, and setting a ceiling for RoW charges. The national spacecom policy will create a framework for robust satellite broadband services to augment 5G backhaul.
DoT is also setting up test labs in collaboration with other ministries and departments to explore 5G use cases. TRAI, too, has initiated 5G network pilots in Bhopal, at Delhi airport, Kandla port and the Bangalore Metro to test the use of street furniture for small cells and aerial fibre deployment.
The Indian data centre market was valued at $4.35 billion in 2021 and is projected to reach $10.09 billion by 2027, growing at a compound CAGR of 15 per cent during 2022-27. India has a strategic location and submarine cable infrastructure, green energy, skilled manpower, etc. Favourable legislation could help exploit these advantages. While data centres have infrastructure status, good data privacy legislation, for example, is a must. The draft data centre policy has received an enthusiastic response. The segment must also overcome challenges such as land shortage, precarious power supply and supply chain delays.
There was a long period when telecom was in the doldrums. There’s new life in the sector and given its strong externalities, this should accelerate overall growth.