The Indian telecom industry is the second largest in the world in terms of subscriber base. The country boasts of a massive subscriber base of 1.17 bn currently combined with a teledensity of 84.88%. The country’s telecom sector is divided into infrastructure, equipment, 5G, Broadband, Mobile Virtual Network Operator (MNVO), Telephone service providers and White Space Spectrum.
Here’s a detailed look at the current state, growth and hurdles in the country’s telecom sector. Also covered are top stocks by market capitalisation in the telecom sector.
Here are some key statistics on the rapidly expanding telecom industry in India:
Telecom market | India is the world’s second-largest telecommunications market. Total telephone subscriber base was at 1,177 million in 2020Teledensity reached 87.45% in 2020 |
Telecom towers | 65% growth over the past 7 years.Rise in number of mobile towers from 4 lakhs in 2014 to 6.6 lakhs in 2021.Mobile Base Transceiver Stations have increased from 800,000 in 2014 to 2.3 mn in 2021. |
Internet users | India has world’s second-largest internet user baseTotal internet subscribers reached 636.73 million, an increase of 45.74% CAGR from 2006 to 2019 Wireless data usage growth was at 10.58%, reaching 19 lakh terabytes in 2019 |
Some of the factors that have triggered the fast growth in this sector are:
Did you know
The Indian telecom sector ranks 3rd in terms of sectors attracting maximum FDI inflows. With 100% Foreign Direct Investment (FDI) being allowed in this sector, the FDI inflows rose 150% in telecom between 2014 and 2021 to touch $20.72 bn. This has also given rise to employment opportunities in the sector as it directly provides 2.2 mn jobs and indirectly provides about 1.8 mn jobs.
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Here are some of the key developments in the Indian telecom sector recently:
The 5G spectrum auction that will begin shortly is being made available for commercial networks as well as private networks. The latest one to tap onto this opportunity is Adani group which intends to use the 5G spectrum for building a private network.
India’s richest man, Gautam Adani’s Adani group will be one of the participants in the auction for 5G telecom spectrum. Although the company said that it does not intend to participate in consumer mobility space, experts are indicating a strong possibility that the company may enter the same in the long run. This means, tough competition lies ahead of Airtel, Reliance Jio, and Vodafone-Idea. While Jio and Airtel can withstand competition due to strong balance sheets, experts indicate tough times ahead for Vodafone-Idea.
Some of the hurdles in the growth journey of this sector are:
Bharti Airtel Ltd, is India’s and Asia’s leading telecom services provider. The company has operations in India and Sri Lanka. Known as one of the pioneers of the telecom revolution in the country, the company has been instrumental in transforming the sector by offering world-class services based on cutting edge technologies. The company’s businesses are divided into three strategic business units (SBUs) – Mobile Services, Airtel Telemedia Services & Enterprise Services. Some of the company’s offerings include mobile services, broadband, Airtel PC secure, Digital TV, Airtel Net PC & IPTV, Data and IP Solutions, Email on the go, Calling Cards, Wireless Internet- Data Card & USB Modem, etc. The key details of the company are tabled below.
Category | Details |
Market Capitalization | Rs. 3,93,703 crores |
PE Ratio | 91.92 |
Return on Equity | 6.78% (July’22) |
Debt Equity Ratio | 2.55 (July’22) |
Promotor’s Holdings | 55.93% |
Share price | Rs. 660.55 (11 July 2022) |
Dividend Yield | 0.57% |
Indus Towers Limited is an entity formed by the merger of Bharti Infratel Limited and Indus Towers. It is one of the largest telecom tower companies in the world. It aims to enable easy communication for people by offering affordable and high-quality services for improved network connectivity in the country. The company has more than 175,510 towers and 318,310 co-locations with presence in 22 telecom circles. Some of the company’s leading customers include Bharti Airtel, Reliance Jio, and Vodafone Idea Limited. The key details of the company are tabled below.
Category | Details |
Market Capitalization | Rs. 56,420 crores |
PE Ratio | 8.85 |
Return on Equity | 33.52% (July’22) |
Debt Equity Ratio | 0.89 (July’22) |
Promotor’s Holdings | 67.49% |
Share price | Rs. 213.30 (11 July 2022) |
Dividend Yield | 5.25% |
Vodafone Idea is one of India’s leading mobile services providers offering 2G, 3G, and 4G platform services. It holds licenses to operate across all 22 service areas in the country. Apart from mobile services, the company also offers many value-added services including GPRS, GSM, GPS, call conference, and customized solutions for specific business needs. The key details of the company are tabled below.
Category | Details |
Market Capitalization | Rs. 26,980 crores |
PE Ratio | – |
Return on Equity | -225.19% (July’22) |
Debt Equity Ratio | – |
Promotor’s Holdings | 74.99% |
Share price | Rs. 8.70 (11 July 2022) |
Dividend Yield | – |
The company offers telecom services including mobile, public telephone booths, fixed wireless phones (FWP) & wireline services. Some of its telecom services include Wi-Fi, Ethernet, Web Conferencing services, leased lines, DSL and Managed Gateway services. The company offers Virgin Mobile branded services targeted at Indian youth. Apart from an online retail store ‘i-Choose’, the company has set up True Value Shops to showcase its products and services. The key details of this company are tabled below.
Category | Details |
Market Capitalization | Rs. 23,361 crores |
PE Ratio | – |
Return on Equity | – |
Debt Equity Ratio | – |
Promotor’s Holdings | 74.36% |
Share price | Rs. 120 (11 July 2022) |
Dividend Yield | – |
Mahanagar Telephone Nigam Limited (MTNL) is a fixed-line telecommunications service provider with operations in Delhi and Mumbai. It also offers cellular services based on GSM or global system for mobile communications technology in these cities. Apart from these, the company offers broadband and Internet services. The company’s revenue mainly comes from local, domestic long distance and international calling services. The key details of the company are tabled below.
Category | Details |
Market Capitalization | Rs. 1,219 crores |
PE Ratio | – |
Return on Equity | – |
Debt Equity Ratio | – |
Promotor’s Holdings | 56.89% |
Share price | Rs. 23.20 (11 July 2022) |
Dividend Yield | – |
Here are some of the top factors that investors must consider before investing in telecom industry stocks:
With the auction for 5G spectrum scheduled to begin in July, 2022, India’s telecom sector is slated to experience further growth. Many telecom operators will be bidding to get an allotment of spectrum in this auction. With 5G introduction, the industry will see further innovation in applications including AI, machine to machine communications (M2M), and IoT.
The government increased the Foreign Direct Investment (FDI) in the telecom sector from 74 to 100%. Of this, 49% is allowed through the automatic route and the remaining through the Foreign Investment Promotion Board (FIPB) approval route. The government also allows 100% FDI in telecom infrastructure space.
Telecom operators are facing increasing challenges like declining margins as there is higher pressure from the government to reduce tariffs to cover more areas in the country.
The telecom sector is slated to see higher competition from entrants like Adani Group bidding for 5G auction. This will likely be beneficial for the sector, however, the existing players may see declining market share.
There is likelihood of Reliance Jio going public through an IPO, however, the company has not made an official announcement. The IPO can be delayed due to uncertain market conditions in 2022.
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