The past few years have been extremely challenging for the telco business in In­­dia, with high competition and eroding profitability. While 2018 did not see any major departure from these trends, a few positive developments gave some ho­pe to the telco community for better fu­ture prospects.

To begin with, the market has finally consolidated into a 3+1 structure, which is crucial for ARPU stabilisation in the long run. Notably, with the rationalisation of the industry,  Bharti Airtel slipped down the pecking order after a two-decade-long reign. It was replaced by the Vodafone-Idea merged entity as the number one player in the market. At the end of Nov­ember 2018, Vodafone Idea Limited (VIL) led the wire­­less market with a subscriber share of 35.94 per cent, followed by Bharti Airtel at 29.17 per cent and Reliance Jio Infocomm Limited at 23.17 per cent.

During 2018, data traffic continued to grow at a strong pace. This was a silver lin­ing in an otherwise challenging environment. Thus, despite financial cons­train­ts, network expansion was a key focus area for operators. Bharat Sanchar Nigam Limited (BSNL) forayed into the 4G space, while VIL, Airtel and Jio embarked on massive 4G/LTE expansion drives. Fibre roll-outs gained momentum as telcos started pre­paring for the laun­ch of 5G.

On the flip side, poor finances continued to weigh down incumbents as competition and price wars could bring no up­turn in ARPUs. The Vodafone-Idea mer­g­ed entity posted a loss in its first-ever financial results for the quarter ended September 2018. Jio, meanwhile, continued to deliver a strong performance quarter after quarter. Its revenue crossed Rs 100 billion during the quarter ended December 2018. For Airtel, growth in the African business helped to keep it afloat.

The year also saw operators finally looking beyond traditional telecom services to leverage opportunities presented by the broader digital ecosystem. They collaborated with technology vendors, content developers, infrastructure provi­ders, fintech companies, etc. to broaden their revenue streams.

Asset monetisation emerged as a key theme across telcos during the year. They spun off their infrastructure assets into separate subsidiaries while some sold their infrastructure business.

The launch of the National Digital Com­munications Policy, 2018 brought back some optimism into the telco community. It promises the rationalisation of taxes and levies, and focuses on ease of doing business. It lays down roadmaps for the introduction and proliferation of new technologies such as internet of things (IoT), machine-to-machine communication and 5G. The timely and effective implementation of the policy objectives will not only help telcos in their speedy recovery, but will also open up new growth avenues.

A review of the performance of the key telcos and related developments during 2018…

Vodafone Idea Limited

The year 2018 proved to be a mi­­le­­stone one for Vodafone India and Idea Cellular, which mer­ged their operations to create a telecom giant, VIL. With the completion of the mer­­ger in August 2018, VIL em­er­ged as the largest telecom operator in India with a su­­bscriber market share of around 42 per cent, overthrowing Bharti Airtel from the top spot. The merged entity with its spectrum portfolio of about 1,850 MHz is now the largest voice network in the country with over 200,000 GSM towers and about 233,000 km of fibre connectivity. It is also the largest operator in terms of revenue mar­ket share, though whether it will be ab­le to retain the same going forward is disputable.

A major part of 2018 was spent by the two telcos in a complex and costly exercise of integrating their networks and operations. They completed circle-level ca­pex planning for network integration including vendor selection, while equipment ordering is in the final stages. The vendors selected for supplying new network equipment to VIL are Nokia, Ericsson, Huawei and ZTE, which have been collectively awarded contracts worth $1.3 billion-$1.4 billion.

Infrastructure expansion is a key priority for the new company. This is because despite being the largest telco in the country, VIL faces strong competition from its peers. The operator added 24,866 broadband sites (3G+4G) during the quarter en­ded September 2018, taking its overall broad­­band site count to 365,575. Further, all the operator’s 4G sites were made voice over long term evolution (VoLTE) enabled.

VIL is also conducting trials for software-defined networking and network function virtualisation technologies and plans to soon launch these commercially. Meanwhile, it conducted trials for narrowband IoT technology in Jaipur and Kochi in December 2018, and is also planning a commercial roll-out.

During the year, VIL made efforts to strengthen its digital content portfolio. While Vodafone already had partnerships with digital streaming services like Amazon Prime and Netflix, the merged entity, VIL, recently partnered with hoichoi, a Bengali entertainment content provider, to offer the latter’s exclusive digital content to both Vodafone and Idea customers.

On the financial front, VIL undertook fundraising and asset monetisation to strengthen its balance sheet. In September 2018, VIL raised Rs 15 billion by way of non-convertible debentures (NCDs) on a private placement basis. Earlier, Idea raised Rs 67.5 billion to infuse capital into the merged entity. Further, Idea and Vodafone independently completed the sale of around 20,000 stand-alone tower assets to the American Tower Corporation. In a bid to further increase balance sheet flexibility, VIL is now exploring opportunities to mo­netise its own fibre assets, consisting of over 156,000 km of intra-city and intercity fibre routes. To this end, the operator has initiated the transfer of its own fibre to a wholly owned subsidiary.

Going forward, the complete realisation of VIL’s merger synergies will chart the future growth path for the operator. VIL expects to generate merger integration benefits worth Rs 140 billion (84 billion opex and 56 billion capex) by financial year 2021 as its integration process is moving ahead of plan. Further, VIL recently announced plans to invest Rs 270 billion during 2019-20 towards network expansion, augmentation and modernisation.

Maintaining its leadership position in the face of growing competition is an im­me­­diate challenge looming over VIL. The company has already cited cash flow issues and has sought government permission to defer payment of spectrum-related dues amounting to Rs 50 billion. It would need all its firepower and innovative growth strategies to stay ahead of the competition. To this end, it must gear up for 5G and plan to emerge as the front runner in the space.

Bharti Airtel

The year 2018 was a difficult one for Bh­ar­ti Airtel. The creation of VIL pushed it to the second spot in the Indian telecom pecking order. While there was no major respite in its financial stress, Airtel relied on its Africa business for its overall revenue growth. In November 2018, Airtel’s Africa unit concluded a pre-initial public offering placement of shares to six global investors, including Warburg Pincus, Temasek, Singtel and SoftBank Group International. It raised $1.25 billion, which will be used to finance the company’s debt besides expan­ding operations in Africa.

Back home, the operator took several measures to pare its debt to a manageable level and fund its capex. In March 2018, the operator’s parent company, Bharti Tele­­­­com, secured an investment of Rs 26.49 billion from Singtel, by way of preferential allotment of shares. Further, Air­tel secured full commitment from leading global banks like Bank of America, Barc­lays Bank, BNP Paribas, JP Morgan Chase Bank and Citibank to refinance its debt wor­th Euro 1 billion. Airtel also raised ap­p­­roximately Rs 30 billion through the issue of listed, unsecured, rated, redeem­able NCDs to fund its capex plans aimed at bolstering its 4G network.

Bharti Airtel also engaged in asset monetisation to raise capital. In August 2018, it sold a 20 per cent stake in its satellite television arm, Bharti Telemedia Limi­ted, to private equity firm Warburg Pincus for $350 million. Recently, the operator decided to offload a 32 per cent stake in Bharti Infratel to Nettle Infra­struc­­ture In­vestments Limited. The move was a part of its strategy to monetise stakes in Bharti Infratel. Further, the operator formed a new fibre company to enable it to monetise stakes if needed.

The funds raised through asset monetisation and fundraising initiatives are being used to support Airtel’s network transformation drive. In 2018, the operator took initiatives to scale up infrastructure deployments across the country. It added around 8,077 network towers and 31,357 route km of fibre between the quarter ended Sep­tem­­ber 2017 and the quarter ended Sep­tem­­ber 2018. In addition, Airtel entered into key strategic deals to scale up capacity in the subsea cable arena. It acquired the India leg of Gulf Bridge International’s India-Middle East-Europe submarine cable system as well as a significant capacity in the Middle East-Europe leg. In ano­ther key move, Airtel signed a strategic deal with Telecom Egypt to obtain indefeasible right of use on the Middle East-North Africa submarine cable and TE North Cable systems.

In the broadband space, Airtel continued to expand its 4G and VoLTE network. In fact, it recently became the first operator to launch 4G services in the Andaman & Nicobar Islands. The operator’s VoLTE coverage now spans 21 telecom circles. Airtel also conducted India’s first licensed assisted access technology trial over a live LTE network in collaboration with Ericsson. It also conducted India’s first 5G network trial under a test set-up in collaboration with Huawei. It deployed advanced massive multiple-input multiple-output pre-5G technology at select Indian Premier League 2018 match venues.

Airtel was also actively involved with the government in its efforts to enhance broadband reach. In June 2018, it partnered with the Department of Telecom­mu­­ni­­cations to boost broadband penetration in rural India by establishing broadband experience centres through infrastructure provided under the BharatNet programme. Under the partnership, Airtel set up three broadband experience centres in Ghazipur, Gorakhpur and Varanasi districts of Uttar Pradesh, providing 100 Mbps connectivity. Further, Airtel com­mit­ted to partner with the government under BharatNet in about 30,500 gram panchayats. It also announced its participation in the government’s Bharat Wi-Fi initiative, aimed at rolling out one million Wi-Fi hotspots across the country to establish a countrywide common interoperable Wi-Fi network.

On the home broadband front, Airtel increased its number of home passes and focused on reworking its strategies to take on Jio’s GigaFiber. It rolled out almost a million home passes during the first half of 2018, which was equivalent to its entire roll-out in 2017. It recently announced plans to focus exclusively on premium customers and expand broadband services only across India’s top 100 cities rather than focusing on countrywide deployment, like Jio. To ensure customer stickiness, Airtel plans to build the Airtel Homes Platform, wherein it will offer bundled services. The operator is currently piloting it in Andhra Pradesh, whereby broadband, DTH and a SIM card can be bought together.

Under its Project Next initiative, it set up a digital innovation lab in Bengaluru to work on technologies such as artificial intelligence (AI), IoT, and augmented and virtual reality. This is part of its broader strategy to develop strong in-house technological capabilities. In October 2018, Airtel announced an acquihire deal with AuthMe ID Services, a Benga­luru-based start-up focused on AI-based solutions, to offer innovative digital products to consumers. The operator also kept an eye on non-core growth areas for driving future revenue streams. It partnered with Netflix, Zee5 and NDTV HOP to add to its array of content-based offerings.

Going forward, 2019 is going to be an interesting year for Bharti Airtel. The operator will have to battle it out with its rivals to regain its market position. In this regard, it will be crucial for Airtel to revisit its strategies and drive network advancements. Wired broadband services will play a key role in strengthening Airtel’s position. The operator already has plans to step up its investments in the fibre-to-the-home (FTTH) space and is exploring partnerships with other entities that may have access to the last mile.

Reliance Jio

The past year was an eventful one for Reliance Jio. The telco crossed 250 million subscribers in September 2018, within just 25 months from the roll-out of services, a first in the Indian telecom space. The operator added 27.9 million subscribers during the quarter ended December 2018 alone.

During 2018, network expansion and advancement continued to be a key priority for the operator. The company is on track to expand its all-IP 4G LTE network coverage to 99 per cent within the next few months. Jio continues to be the only operator to deploy tri-band (850 MHz/ 1800 MHz/ 2300 MHz) 4G across all network sites. In March 2018, Jio extended its partnership with Samsung to deploy a nationwide cellular IoT network in the country. In February 2018, it deployed a commercial narrowband IoT (NB-IoT) network in Mumbai. In order to further optimise and enhance the video experience, Jio partnered with Cisco to deploy multi-access edge computing over its network. It started testing its voice over Wi-Fi (VoWi-Fi) services in December 2018. VoWi-Fi will enable subscribers without active cellular connectivity to make voice calls and access the internet.

A key development in the past year was the announcement of Jio’s much anticipated entry into the wired home broadband space. In August 2018, Jio began accepting registrations for Jio GigaFiber, which will serve as a platform for home broadband, entertainment, smart home, wireline and enterprise services. Customers across more than 1,400 cities have shown interest in this service and homes are being connected based on the number of requests received in any area. To expedite the roll-out, in October 2018, Reliance Industries Limited (RIL) announced its decision to acquire a controlling stake in Den Networks Limi­ted and Hathway Cable and Datacom Li­mited, through a mix of primary investments and secondary purchases.

Jio also made a number of strategic acquisitions with a focus on exploring new areas of growth and diversifying from its core telecom business. For instance, in June 2018, it signed an agreement to acquire Radisys for approximately $74 million in order to consolidate its position in emerging technology segments such as 5G and IoT. During the same month, Jio acquired around 73 per cent stake in AI-based education technology provider Embibe and plans to invest $180 million in the platform over the next three years. Earlier, in March 2018, RIL announced the merger of its digital music service, JioMusic, with music platform Saavn. Apart from this, Jio entered into a strategic arrangement with Disney to provide the latter’s content on its over-the-top platform, JioCinema.

In a bid to follow up on the success of the JioPhone, Jio launched the JioPhone 2 in July 2018. Instead of inviting pre-bookings, Jio opted to conduct flash sales this time. The first one was held in August 2018. However, JioPhone 2 failed to turn as many heads as the first model. Probable reasons for the lukewarm response could be the delayed launch of popular apps like WhatsApp and YouTube on the platform and the lack of a refund policy, which was offered with the first JioPhone.

Other highlights of the year include Jio’s decision to demerge its fibre and tower business to create two wholly owned subsidiaries, Jio Digital Fibre Private Limited and Reliance Jio Infratel Private Limited, in December 2018. Jio also forayed into the payments space with the launch of Jio Payments Bank on April 3, 2018. It also notified its plan to invest Rs 10 billion in a greenfield data centre in Kolkata’s upcoming information technology hub.

Over the course of the year, Jio raised funds for various purposes. In February 2018, it announced that it will raise as much as $2.2 billion in foreign currency debt to fund the purchase of Reliance Com­­muni­cations’ wireless assets. Subse­qu­ent­­ly, in April 2018, it raised $500 million through a syndicated samurai loan from three Japanese banks – Bank of Tokyo Mitsubishi UFJ, Sumitomo Mitsui Banking Corpo­ra­tion and Mizuho Bank. During the same month, it raised Rs 25 billion in corporate bonds from Axis Bank. The proceeds were earmarked for its proposed expansion. In June 2019, Jio signed a $1 billion long-term loan facility with the Korea Trade Insurance Corporation, K-SURE.

The upcoming year will be an exciting one for Jio. The industry will closely follow the nationwide launch of Jio Giga­Fi­ber, which is expected to disrupt the wire­line broadband market. The service will be launched across 1,400 locations. Jio is also making efforts to step up its content game through the launch of JioSaavn and partnerships with other production houses such as Disney. It will be interesting to see Jio’s efforts to diversify from its core telecom business will pan out.


Despite its precarious financial situation, BSNL’s resolve to stay put in the competition is commendable. In re­cent years, the operator has taken several initiatives to drive business growth. In 2018, BSNL continued to make concerted efforts to strengthen its coverage while also exploring newer sour­ces of revenue. It managed to add subs­cribers in the face of stiff competition from its private peers. In October and November 2018, its net subscriber additions were higher than those of Airtel and VIL, and it was second only to Reliance Jio.

BSNL earmarked Rs 43 billion for network expansion in 2018-19, and ex­panded the optic fibre cable (OFC) network in Jammu & Kashmir by adding more than 2,000 km of OFC routes. It also undertook the upgradation and installation of more than 800 base transceiver station sites in the state. BSNL Tower Cor­poration Limited (BTCL), a subsidiary of BSNL, commissioned its first 4G tower in Karnataka. BTCL will now install 12,000 mobile towers for 3G services and 10,000 for 4G services.

The telco launched 4G services in Idukki district of Kerala. It also launched a pilot project for testing its 4G services in two districts of Telangana. The telco now plans to expand its 4G reach in these circles as well as in Odisha and Arunachal Pradesh. During the year, BSNL also launched its voice over internet protocol service, Wings, which allows unlimited calls to any network in the country at a one-time registration charge.

To leverage the opportunities presented by next-generation technologies, BSNL has entered into several strategic partnerships and collaborations in the areas of 5G, IoT, AI and smart cities. It signed MoUs with Nokia, ZTE and Co­ri­ant to la­un­ch 5G services in India at the same time as the global launch. It partnered with Un­limit to provide comprehensive IoT solu­­tions to enterprise custo­mers across India. In addition, it partnered with Soft­Bank and NTT Communi­cations to develop solutions for smart cities. Under its partnership with Nokia, BSNL will implement the next level of industrial automation by leveraging 4G/LTE. BSNL also signed an MoU with Ericsson to develop new 5G use cases by leveraging the Ericsson Centre of Excellence for 5G.

During the year, BSNL also explored some new revenue opportunities. It beca­me the first operator in India to launch mo­bile virtual network operator service al­ong with Aerovoyce and Plintron. It is also planning to provide connectivity via satellites and is in talks with SoftBank for leasing out broadband bandwidth from One­Web’s low earth orbit communication sate­lli­tes. In 2018, BSNL awarded a contract to NEC Technologies India to build a 2,300 km optical submarine cable system between Chennai and the Andaman & Nico­bar Islands, providing a speed of 100 Gbps. BSNL also received smart city projects worth Rs 1.5 billion.

In a bid to revive its dwindling wireline business, BSNL launched its prepaid landline services in all circles across the country. In addition, it recently launched Bha­rat Fibre, which is a high speed FTTH service, to challenge Jio GigaFiber.

BSNL is also executing some big-ticket government projects worth Rs 250 billion, which include laying of OFC-based network for defence services and Phase II of the BharatNet project.

Despite the enthusiasm on the operational front, the financial situation of the telecom PSU continues to be grim. During 2017-18, BSNL’s annual losses stood at Rs 79.92 billion (provisional and unaudited), a sharp increase of 67 per cent from 2016-17. Since BSNL has been incurring losses for several years, the Department of Public Enterprises has declared it “incipient sick”.

That said, the consistent increase in net wireless subscriber additions gives so­me respite to the operator. Also, the gover­n­ment’s allocation of 4G spectrum to the operator will go a long way in improving its business prospects. BSNL has planned an investment of about Rs 250 billion to roll out 4G services across India. It is also betting big on 5G.


Government-owned telecom operator Mahanagar Tele­ph­one Nigam Limited (MTNL) continued to re­ma­in in the red during 2018. The telco, which was declared “incipient sick” in 2018  by the Department of Public Enter­prises, has been facing a series of financial setbacks for the past five fiscals owing to huge spectrum-re­la­ted payouts, increasing burden of em­p­loy­ee remuneration and declining ARPUs.

During July-September 2018, MTNL’s losses increased to Rs 8.59 billion. Mean­while, the company’s total income declined to Rs 6.22 billion on a stand-alone basis during the quarter. MTNL, which operates in only two circles (Delhi and Mumbai), has a staff count of around 23,000. The company’s employee cost accounted for 92.2 per cent of its total income and was around 29 per cent more than its revenue from operations, which stood at Rs 5.73 billion during July-September 2018.

On the operational front, the company has been witnessing one of the highest user churn rates in the wireless segment owing to cut-throat competition. The absence of 4G in its service portfolio is a major shortcoming, especially at a time when all private telcos are gearing up for 5G.

In a bid to compete in the market, MTNL submitted a proposal to DoT in May 2018 seeking the allotment of 4G spectrum in two bands and offered its equity in return. MTNL sought 10 MHz in Del­hi in the 1800 band and 5 MHz in Mumbai in the 2100 MHz band. The company requested the government to grant it 4G spectrum in lieu of equity worth Rs 65 billion-Rs 70 billion and extend its mobile licence, which is expiring in 2019, till 2021.

MTNL sought shareholder approval for raising the authorised share capital from Rs 8 billion to Rs 100 billion, and the borrowing powers of the board by around 40 per cent from Rs 180 billion to Rs 250 billion. The borrowing would help fund its capex for service expansion, which is being pegged at Rs 13 billion-Rs 15 billion over and above the cost of spectrum.

The shareholders also approved raising of Rs 55 billion as debt by issuing NCDs on a private placement basis. MTNL’s management also requested the government to take back the unutilised land and assets valued at around Rs 193 billion to pare its debt.

The company’s only hope at this point is its wireline services. MTNL ranks third in terms of wireline market share by subscribers, behind BSNL and Airtel. Given that the Indian wireline market remains largely untapped, MTNL can work towar­ds leveraging the revenue opportunity in this space by providing bundled services.

During 2018, MTNL partnered with the New Delhi Municipal Corporation to launch FTTH and public Wi-Fi services in the New Delhi region with 1 Gbps upload and download speeds. The year 2019 will be a deciding year for the state-run operator. MTNL is hopeful that the government will come to its rescue by allocating it 4G spectrum. It will be interesting to see how MTNL catches up with its competitors that have moved far ahead in the race.