Chennai, Sep 15: Indian mobile phone service providers will follow China’s 5G and industrial internet line, said CLSA Ltd in a research report.
According to the report, Reliance Jio and Bharti Airtel will consolidate their market further and deliver 22-23 per cent EBITA CAGR by FY25CL. China and India have the world’s two largest mobile bases, with a combined 2.78 billion (bn) subscribers.
The worldwide march to 5G accelerated with China launching SA 5G (standalone standard) in 2020, said the report.
Top operator China Mobile’s 5G package users now comprise 53 per cent of its 967 million subscribers and network users doubled in the past year to 263 million.
According to CLSA, the 5G migration lifted the average revenue per user (ARPU) 10 per cent driven by higher data usage. SA 5G is also the foundation of China’s industrial internet, the next big market driver, led by cloud, Internet of Things (IoT) and others which could grow 20-30 per cent YoY to contribute 13-27 per cent of telcos’ 2022 revenues.
The CLSA said Reliance Jio targets SA 5G while Bharti 5G non standalone access (NSA) will reuse its dense 4G network.
The 5G handsets already make up 30 per cent of smartphone shipments and should reach 250 million by FY25.
In India, early 5G monetisation will be driven by top-end subscribers, a jump in network capacity and 5G-based enterprise and fixed wireless access (FWA) services.
The 5G FWA alone could bring in $5-9bn in annual revenue. Further, 5G will coincide with growing ARPU and market -share gains for Reliance Jio and Bharti Airtel, the report notes.
According to CLSA, significant smartphone and ARPU expansion should make India mobile into a $36 bn market by FY25.
In the past five years, 4G subscribers have tripled to 761 million while data traffic boomed 18 times, with Reliance Jio’s affordable tariffs and digitisation providing support.
The sector also consolidated, with Reliance Jio and Bharti Airtel now making up 76 per cent of the market.
Reliance Jio is following Bharti Airtel’s tariff hikes and sector ARPU is up 53 per cent in three years. But when adjusted for inflation, ARPU is 25 per cent below levels six years ago, the CLSA said.
