Data Wave Hits

Tech & Business Trends 2015 

Data becomes seriously relevant in 2015, says Ankit Agarwal, Head- Telecom Products, Sterlite Technologies

 2014 has been an interesting year for the telecom operators in India – data as a percentage of revenues has increased from around 6-7% to more than 10%. As per UBS research, with a total industry revenue pool of 180,000 crore, this roughly translates to 18,000 crore of revenue from data. This is still well below average of global Western economies of 40-50%. China Mobile for example, gets 40% of its revenue from data services (as of Sept 2014). Four key events are expected to significantly increase the revenue proportion of data- towards 20% of revenue by end of 2015:

•  Quantity of 3G spectrum offered to the Telecom operators will increase in the February 2015 auction. The 15 Mhz that the Defence ministry will free up will be a boon for the 3G spectrum-starved private operators, as most of them have entered into intra-circle roaming due to scarcity of radio waves.

•  As incomes rise, smart phones get cheaper and local content increases, the penetration of smart phones will increase. As per Credit Suisse research, China is already selling sub $100 LTE smartphone. India has nearly doubled its smartphone users from 76 million in 2013 to 123 million in 2014. This is further expected to grow by 50% in 2015.

•  Reliance Jio will officially launch its much-awaited pan-India 4G services by first half of 2015. A large part of the revenues expected by the 70,000 crore network is based on 4G data services. We are already seeing signs of the competition like Airtel and Vodafone gearing up for increased data services- increased number of base stations and much larger quantity of optic fiber deployment for data backhaul.

•  Further consolidation in the telecom sector will pick up when rules for spectrum trading and sharing, and for mergers and acquisitions are put in place together. The number of operators is expected to reduce from 11-12 currently to 5-6 by the end of 2015. The reduced competition will ultimately drive better realization per MB of data. Indian operators currently generate 26 paisa of revenue per MB, compared with China (with just 3 operators) that generates around 103 paisa of revenue per MB.

With data becoming this significant for the operators, they will have to significantly invest in networks augmentation to ensure the quality of bandwidth offered to the consumers. As far as the consumers are concerned, it will indeed be a Happy New Year!

(Ankit Agarwal is Head- Telecom Products at Sterlite Technologies)