Light Reading's crystal ball says India's 5G ecosystem and data center industry will grow in 2025, even as industry braces for more competition in 5G and focus on 5G monetization.
The year 2024 saw several key developments in the Indian telecom industry, including the industry hiking tariffs after a long time, expanding the 5G network and finally coming up with a differentiated pricing for 5G. In 2025, the 5G ecosystem will continue to grow with the expected launch of Vodafone Idea and BSNL's 5G networks. In addition, the top two players, Reliance Jio and Airtel, will continue to expand the capacity as well as coverage of 5G networks. Other trends for 2025 include the likely launch of satcom services and the continued boom in the country's data center industry.
Here are the trends that are likely to dominate Indian telecom industry in 2025:
5G launch by Vodafone Idea and BSNL
This year is finally likely to witness the launch of 5G services by India's third-largest service provider, Vodafone Idea, and state-owned Bharat Sanchar Nigam Limited (BSNL).
Vodafone Idea has already awarded contracts to Nokia and Ericsson last year and is planning to roll out 5G services in March this year. BSNL has, meanwhile, completed trials of its 5G radio access network (RAN) and core network in 3.6GHz and 700MHz spectrum and is planning to launch 5G services by mid-2025.
The launch of Vodafone Idea and BSNL's 5G services, coupled with the drop in smartphone prices, is likely to increase competition and make 5G more accessible.
Growing 5G ecosystem
The 5G ecosystem will continue to grow and expand in 2025. India's two largest service providers, Reliance Jio and Bharti Airtel, already have around 148 million and 90 million 5G subscribers (as of August 2024), respectively, and this year will see them focusing on 5G monetization.
Airtel recently awarded Ericsson a multi-year, multi-billion extension deal for 4G and 5G RAN products and solutions for wider coverage and enhanced capacity.
The increase in 5G data consumption and the growth in the number of 5G subscribers have already started to impact the quality of 5G services in the country. The two telcos will focus on expansion as competition grows with the anticipated launch of Vodafone Idea and BSNL's 5G network.
In addition, fixed wireless access (FWA) is recording healthy growth, so both Jio and Airtel are likely to focus on this to monetize their 5G investments. Jio reported having over 2.8 million 5G FWA users in the quarter ending September 2024 and is hoping to add another 1.9 million broadband users in the quarter ending December 2024.
However, growth in 5G private networks is likely to remain muted because the issue of the method of spectrum allocation to enterprises is yet to be resolved. While telcos have been calling for the frequencies to be auctioned, enterprises are vying for administrative allocation of the spectrum for 5G private networks.
Another tariff hike ahead?
Last year, telcos introduced tariff hikes, and experts believe this year will see another round of increasing rates. "For private telcos, a tariff hike is crucial to recover 5G-led capex and improve ROCEs. However, earning higher returns would be difficult given Average Revenue Per User (ARPUs) will have to increase by 25%-35% (INR60 ($0.69)-70 ($0.81)) from 2QFY25 levels to achieve a 15% ROCE [Return on Capital Employed]," says Priyanka Bansal, associate director at research agency Ind-Ra.
"Ind-Ra believes industry-wide tariffs would rise 6%-10% yoy [year-on-year ] in FY26, due to (a) the base effect of the recent tariff hikes, and (b) organic tariff growth of 3%-5% backed by the change in user mix," says the note issued by Ind-Ra.
2025: The Year of Satcom?
The year 2024 saw the Indian government finally resolving the conflict regarding the allocation of satcom spectrum. While the telcos, including Reliance Jio, Bharti Airtel and Vodafone Idea, were demanding an auction, the government opted instead for administrative allocation of the spectrum.
This decision to administratively allocate satcom spectrum is likely to attract several international players. Media reports suggest Rivada Networks, Sateliot, Telesat and Globalsat have recently written to the Telecom Regulatory Authority of India (TRAI) to express their interest to launch satcom services in the country.
Several satcom service providers, including Eutelsat OneWeb and JioSpaceFiber, have already received the required approvals, and India is likely to launch satcom services this year. Further, according to media reports, Elon Musk's StarLink has also agreed to the data localization demand of the Indian government, which clears the hurdle for the company to acquire the required Global Mobile Personal Communication by Satellite Services (GMPCS) license to offer satcom services in the country. All these developments indicate that India is moving closer to the launch of satcom-based broadband services.
India's data center boom shows no sign of abating
According to a recent JLL India report, the country's data center sector is all set to grow by 66% by 2026. The growing adoption of AI is one of the key factors behind this growth. India's data center industry is likely to add 604MW capacity, demanding 7.3 million sq. ft. and $3.8 billion by 2026.
Recently, Microsoft announced an investment of $3 billion in India over the next two years to boost its cloud and AI infrastructure in India. This includes the development of new data centers and upskilling 10 million people in AI by 2030. The year 2025 is likely to see more investments by tech giants and other companies in the country's data center industry.
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