Swapnil Srivastava, Director, TMT, EY Parthenon
In today’s increasingly multi polar world, rising geopolitical tensions are driving fragmentation. In such a climate, secure communication networks that operate on a robust digital infrastructure backbone are more critical than ever.
Global macroeconomic and telco sector outlook remains cautious
Economic conditions directly impact the telecom sector’s growth and investment strategies. While inflation is easing, recessionary pressure remains in many parts of the world, which has impacted spending patterns negatively. The telecom sector is grappling with margin pressure, rising costs and tariff increases by telcos. However, there has been a surge in technological innovations with the adoption of AI/GenAI at scale. Investments in digital infrastructure, especially fibre, have increased significantly in the past two years.
Evolving global telecom landscape
Telcos have moved beyond traditional connectivity. During the COVID-19 pandemic, they transformed into “techcos”, expanding beyond traditional services to include offerings such as payments, video content, asset-light strategy and national wholesale 5G operations. Now, they are reinventing themselves as “digital infracos”, focusing on various forms of connectivity, ranging from end-to-end 5G/IoT proposition to B2B 2X platforms, heavy investments in AI and GenAI, undersea cable infrastructure, partnerships for satellite-based connectivity and development of data centres (DCs) to support compute-intensive workloads.
Global OFC market
The global OFC market is experiencing impressive growth, at a CAGR of 8.6 per cent to reach $20 billion by 2032. This surge is driven by several factors. The fibre-to-the-premises/buildings (FTTP/B) and fixed wireless access markets are being fuelled by these dynamics as operators strive to upgrade their networks to accommodate escalating data traffic. Moreover, governments are playing a pivotal role by subsidising broadband roll-outs to ensure universal high speed internet access. Lastly, the sector is also witnessing significant merger and acquisition activity, which is driving investor interest through carve-outs or spin-offs.
India’s fibre growth
The country’s rate of fibre expansion is more than twice the global growth rate – the market is growing at a CAGR of 13.58 per cent to reach $1.05 billion by 2028. OFC length is expected to grow at a CAGR of 15.7 per cent to 17.95 million route km (rkm) by 2034 from 4.2 million rkm in 2025.
Fibre roll-out hotspots in India
Dense urban regions with a high concentration of large enterprises and huge DC investments have emerged as hotspots for fibre roll-outs. Mumbai and Pune have a strong presence of industrial zones and DCs. In fact, Maharashtra is the leading state in fibre deployment in terms of rkm. Second, with Delhi NCR having a compact geography and high population density, it has one of the highest fibre densities per square km. Third, Bengaluru is among the most fibre-intensive cities, driven by a strong IT/ITeS sector, a thriving start-up ecosystem and DC capacityof 100 MW. Fourth, Chennai is a DC hotspot with a capacity of 225 MW, supported by government initiatives and large manufacturing and IT service bases. Lastly, Hyderabad has a strong base of IT/ITeS companies, increasing investments in DC build-outs and progressive digital policies.
Several factors are fuelling fibre growth in India, including 5G launches, increasing data consumption and growing adoption of cloud technologies and digital services. Dark fibre leasing models are also gaining traction with the emergence of NaaS players.
However, certain trends are unique to India, such as the growing OFC networks of PSUs and increasing rural and semi-urban fiberisation through government-led projects like BharatNet, PM-WANI and the Smart Cities Mission (SCM). Further, segments such as DCs, FTTX and towers are expected to accelerate fibre deployments. Tower fiberisation is expected to reach 70 per cent by 2025 as 5G requires dense small-cell networks with fibre backhaul. DC connectivity is the critical enabler for cloud, AI and enterprise workloads, and DC hubs depend on fibre for global traffic routing. There are over 43 million FTTX connections, driven by the rapid uptake of over-the-top services and remote working. Parallelly, FTTB serves as the backbone for enterprise cloud migration.
Faster fibre roll-out
Recent policy reforms and initiatives are aimed at easing right-of way (RoW) procedures and accelerating fibre roll-out. The new RoW Rules, effective January 1, 2025, make it easier and more cost-effective to deploy subsea cables and connect them to terrestrial networks. Policy reforms by the Central Electricity Authority and the Ministry of Road Transport and Highways encourage leveraging RoW effectively.
Conclusion
Fibre is critical for future-proofing networks. Compared to other countries, India lags behind in tower fiberisation, FTTH penetration and fibre per capita. However, growing demand from 5G backhaul, FTTH expansion, enterprise connectivity, hyperscalers, DCs and last-mile connectivity indicate a massive growth opportunity.
