Telecom in India: Wins and losses for 2023

India had much to cheer about in 2023, with the 5G network rollout gaining momentum and the country making significant headway in developing an ecosystem for satellite-based communications. It also made its intentions clear to play a role in the standardization process for 6G. On the disappointment side, India failed to attract a semiconductor company to invest in setting up a fab unit in the country.

Here are key trends that defined 2023 for the Indian telecom industry:

Expanding 5G coverage

The year 2023 will be remembered as the year of 5G in India. After launching 5G services in October 2022, telcos have deployed 397,923 basestations across the country by the end of November 2023, making it one of the fastest 5G rollouts anywhere in the world. India's top two telcos, Reliance Jio and Bharti Airtel, are well on the path to achieving the target of pan-India coverage by the end of the current financial year in March 2024. According to a recent Ericsson Consumer Mobility report, India is on track to have around 130 million 5G subscribers by the end of this year. The country's third prominent telco, Vodafone Idea, has yet to launch 5G services.  

One of the biggest advantages of growing a 5G network is improved broadband experience in the country. 5G helped India climb 72 places on Ookla's Speedtest Global Index, from 119^th spot in September 2022 to 47^th place in August 2023. Both Jio and Airtel recently launched Fixed Wireless Access (FWA) services and this is also likely to further improve the broadband network in the country. 

However, 5G monetization remains elusive, with telcos yet to introduce 5G tariffs. After more than a year of deploying 5G services, Indian telcos continue to offer unlimited 5G data to subscribers who have 5G-enabled devices.  

Even as the 5G network continues to expand, the 5G private networks story is yet to take off in the country. There have been a few deployments, but the lack of clarity on how the spectrum would be handed out to the enterprises, through auctions or administratively, has delayed the uptake of 5G private networks in the country. On the other hand, there is arguably little push from the enterprises to resolve the issue.   

India bets on 6G

After the successful launch of commercial 5G services, the Indian telecom industry has set its sights on taking a leadership position in 6G. The country launched the Bharat 6G Mission earlier this year with the aim to "Design, develop and deploy 6G network technologies that provide ubiquitous intelligent and secure connectivity for high-quality living experience for the world." India already boasts 127 patents in 6G, making it a frontrunner in the development of the new communications standard. 

India's Bharat 6G Alliance signed an agreement with the US-based Alliance for Telecommunications Industry Solution's (ATIS) Next G Alliance to jointly conduct research on 6G. Another positive step in this direction was the International Telecom Union (ITU) backing India on ubiquitous 6G coverage to bridge the digital divide. All these efforts seek to boost the country's profile in the global telecom industry.

Developing satellite communications

The satcom space is likely to witness significant developments in the coming year. Earlier this year, the government adopted the India Space Policy 2023, which allows domestic and international companies to use low-Earth orbit (LEO) and medium-Earth orbit (MEO) satellites to provide broadband services in the country.

 While Eutelsat OneWeb has been granted approval to provide satellite-based connected services, other satcom players are still in the process of getting approval from the authorities. Jio also launched JioSpaceFiber at the recently concluded India Mobile Congress 2023.

According to a recent ISPA-NASSCOM-Deloitte report, the market potential of providing satellite-based broadband connectivity in remote areas is around $263 million over the next five years. 

Even so, there is a lack of clarity as to whether the spectrum will be auctioned or not for satellite services. While Bharti Group is of the opinion that the spectrum should be allocated by the government, others, like Reliance Jio, believe that it should be auctioned.  

Semiconductor gains and losses

The semiconductor segment witnessed several developments, but the dream of setting up a fab unit in the country remains elusive. The biggest news this year came when was Foxconn and Vedanta called off their $19 billion partnership. The government also had to invite fresh applications for the India Semiconductor Mission (ISM), a $10 billion incentive announced in 2021, because the three applicants were not able to secure a technology partner. Apart from Foxconn-Vedanta, IGSS Ventures and ISMC were the other two applicants.

Another significant development was Micron announcing it would invest $2.7 billion to build a chip packaging unit in the state of Gujarat. India also signed separate agreements with the European Union and the US to collaborate and build a semiconductor ecosystem.

There has also been a significant increase in the number of startups in this segment and they may play a crucial role in boosting India's capabilities in this space.

Data center boom

Digital transformation of the enterprises and 5G rollout coupled with digital public infrastructure, growing usage of bandwidth-intensive applications and stress on data sovereignty laws are driving data center growth in the country. Apart from this, edge computing and the increasing adoption of cloud-based services are also contributing to the growth of data center industry in the country. JLL's recent report says the growth will continue, with 693 MW capacity to be added between 2023 and 2026.

India's growing manufacturing ambitions  

India took several measures to promote domestic manufacturing and bring down dependence on global telecom vendors. Recently, Telecom Minister Ashwini Vaishnaw provided an updated that companies supported by the production linked incentive (PLI) scheme have completed an investment of 24.2 billion Indian rupees (US$290.22 million), leading to exports of INR76 billion ($911.79 million) and creating 17,753 jobs.

Even as India makes efforts to grow its standing in the global telecom landscape, recommendations from the Telecom Regulatory Authority of India (TRAI) on promoting networking and telecom equipment manufacturing in India revealed that manufacturing cost in India is 12-13% higher when compared with China.

A significant development in this regard is Tata Group's Tejas Networks receiving a $900 million order from state-owned Bharat Sanchar Nigam Limited (BSNL) to deploy RAN for its 4G network. Tata Group also emerged as the first Indian company to manufacture Apple's iPhones by acquiring Wistron's operations in India for $125 million.