The Indian telecom space has witnessed an upswing in 4G deployments on the back of improved availability of affor­dable 4G-enabled smartphones and plummeting tariffs. Further, rapid strides have been made in voice over long term evolution (VoLTE) network expansion, giving an impetus to data growth in the country. According to Nokia’s Mobile Broadband India Traffic Index report, 4G contributed to 92 per cent of the overall mobile data traffic in 2018.

Given the momentum, industry exper­ts predict India’s 4G coverage to surpass the 90 per cent availability mark over the next two years. In fact, the overall industry data traffic is expected to increase 20 per cent year on year in 2019 itself. While coverage remains a key focus area for ope­rators, improvement in data speeds and the creation of relevant content will further boost the adoption of 4G, particularly in rural areas.

A look at the changing dynamics of the Indian 4G market and the way ahead for the segment…

New battlefield for operators

4G network availability and coverage has emerged as a key differentiating parameter for operators dealing with intense competition. They are adopting various strat­egies to acquire the top spot in the 4G pecking order.

Reliance Jio, for instance, has become the front runner in the Indian 4G space with the launch of 4G services in Septem­ber 2016. It has developed a nearly pan-India 4G network. In fact, as per a recent study by Ookla, Jio’s 4G network availability stood at 98.8 per cent across the 15 largest cities in India, the highest among all operators. In fact, Jio is on track to expand its all-IP 4G network coverage to 99 per cent over the next few months. This has been enabled by the operator’s 4G-centred strategies. Jio continues to be the only ope­rator to deploy tri-band (850 MHz/1800 MHz/2300 MHz) 4G services across all its network sites. It has also launched Jio­Phone, the first feature phone offering 4G services, making 4G services accessible to all income groups. Further, to provide 4G long term evolution (LTE) connectivity in rural and remote areas, Jio signed a $10 million contract with Hughes Communica­tions India Limited for setting up satellite backhaul in these areas.

Operators like Bharti Airtel and Voda­fone Idea have also stepped up their efforts to expand 4G coverage. Bharti Airtel has started using LTE 900 technology to decongest its 2G and 3G networks across 10 telecom circles – Mumbai, Delhi, Kar­na­­taka, Andhra Pradesh, Kolkata, Punjab, Himachal Pradesh, Northeast, Assam and Rajasthan. To this end, the operator has partnered with Ericsson, Nokia, Huawei and ZTE. So far, technology deployment has been completed in the Andhra Pradesh and Telangana, Mumbai, and Punjab circles. The technology will help improve the operator’s indoor network coverage. Fur­ther, Airtel is planning to refarm spectrum in the 2100 MHz band from 3G to 4G across 20 telecom circles. Such refarming of airwaves is expected to augment its 4G network capacity at virtually zero incremental costs. Apart from spectrum modernisation, Airtel is rapidly rolling out 4G services in uncovered areas. In fact, it recently became the first operator to launch 4G services in the Andaman & Nicobar Islands. The company has launched 4G services in the remote parts of Arunachal Pradesh with the installation of 1,893 4G mobile towers.

Meanwhile, Vodafone Idea has been actively working to enhance its 4G network. In January 2019, the operator rolled out 4G services for Vodafone subscribers in the Madhya Pradesh, Chhattisgarh, Bihar and Jharkhand regions. It is also undertaking radio network consolidation across the country. So far, Vodafone Idea has completed network consolidation in nine telecom circles – West Bengal (excluding Kol­kata), Northeast, Assam, Andhra Pra­­desh and Telangana, Jammu & Kashmir, Hima­chal Pradesh, Bihar and Jharkhand, Harya­na, and Madhya Pradesh and Chhattisgarh. The network integration would allow customers in these regions to enjoy high speed 4G services. Integration in other circles is being done on a cluster-by-cluster basis. The network integration process is expected to be completed by June 2020. In addition, 4G radio network consolidation has been completed in the city of Bengaluru. The operator has also refarmed 10 MHz of 4G spectrum in Mumbai to deliver better data experience to its customers.

While private telecom operators are ex­panding their 4G coverage, state-run operators are also making efforts to catch up. Bharat Sanchar Nigam Limited (BSNL) has entered the 4G space with the soft laun­ch of its 4G services in Idukki district of Kerala. In January 2019, BSNL announced the soft launch of its 4G services in the rural areas of Kullu district of Himachal Pradesh. It has also launched a pilot project for testing its 4G services in two districts of Telan­gana. The operator now plans to expand its 4G reach in Odisha and Arunachal Pra­desh. BSNL Tower Corporation Limited (BTCL), a subsidiary of BSNL, recently com­­­missioned its first 4G tower in Kar­nataka. BTCL now plans to install 30,000 new mobile towers to provide 4G services across India. Of these, 10,000 will be ins­talled in Karnataka alone.

Recently, the Department of Tele­com­mu­­ni­­cations (DoT) asked BSNL to submit its 4G roll-out status report, with information on equipment procurement and funding for network upgrade. DoT needs this information as it is looking to allocate 5 MHz of 4G spectrum in the 2100 MHz band to BSNL. This will go a long way in improving the operator’s business pros­pects in the 4G domain.

Capex plans

Over the past few years, 4G has become a key component of operators’ capex plans. They have been ramping up their investments to capture a larger share in the 4G market in India. Vodafone Idea Limited has planned a total capex of Rs 270 billion for 2018-19 and 2019-20. Of this, Rs 200 billion would be spent on the upgradation and expansion of networks, including 4G, over the next 15 months. Further, the union cabinet has recently approved the Vodafone Group’s FDI of up to Rs 250 billion in its India joint venture, Vodafone Idea Limited. The operator is expected to use the funds to expand its 4G network. Meanwhile, Bharti Airtel’s board has recently approved its plans to raise Rs 320 billion through equity and bond sales. The operator will use a part of the proceeds to augment its 4G network and strengthen its position in the 4G market. Further, Airtel is planning to invest around $2.4 billion to expand its highspeed 4G data network across Africa.

Reliance Jio has recently announced its plans to invest Rs 100 billion in West Ben­gal to expand its 4G network. Jio is expecting to cover about 100 per cent of the state’s population with its 4G network by end-2019. In addition, the operator will establish around 1,000 Jio points in the rural areas of West Bengal. Meanw­hile, BSNL has planned an investment of about Rs 250 billion to roll out 4G services across India.

On the basis of the capex guidance of all operators, India Ratings and Research expects operators to invest around Rs 700 billion during 2019-20. Much of this will be spent on 4G network enhancement and fibre roll-outs.

VoLTE adoption

VoLTE services, which offer greater bandwidth for high quality voice calls, have also become central to operators’ 4G strategy. Reliance Jio already has a fully operational VoLTE-enabled 4G network. In a bid to compete with Jio’s VoLTE offerings, other major operators have started expanding their VoLTE coverage. Airtel has extended its VoLTE network to 21 telecom circles, excluding Jammu & Kashmir. Further, Vodafone India and Idea Cellular, fairly new entrants in the VoLTE market, have launched their VoLTE services in 18 and 20 circles respectively. All of Vodafone Idea’s 4G sites have been made VoLTE enabled.

While incumbent operators have fo­cused on expanding VoLTE coverage with­in the country, Reliance Jio went a step ahead and launched VoLTE-based international roaming services between India and Japan in November 2018. With this, Jio has become the first Indian operator to provide VoLTE-based international roaming services in the country.

Going forward, VoLTE is expected to emerge as the technology of choice for the masses. According to a report by Ericsson, India is projected to have 780 million VoLTE subscribers by 2023.

Network modernisation – Massive MIMO

Apart from network expansion, network modernisation has emerged as a key focus area for operators. This is especially true in the current scenario where operators are st­riving to adopt 5G technology sooner than their rivals. A key technology being dep­loyed by operators to enable the transition to 5G networks is massive multiple input, multiple output (MIMO) technology.

Bharti Airtel, Vodafone Idea and Reliance Jio have started deploying massive MIMO technology in metro cities, which are witnessing a data explosion. In 2018, Bharti Airtel deployed the technology at cricket stadiums during the Indian Premier League. Airtel is also planning to increase the use of massive MIMO in major business hubs and residential complexes across several states. Apart from massive MIMO, Air­tel is testing licensed assisted access (LAA) technology. Airtel conducted India’s first LAA technology trial over a live LTE network in collaboration with Ericsson. Fur­ther, Vodafone Idea has deployed new technologies such as massive MIMO, small cells and time division duplexing (TDD) in Delhi-NCR and Mumbai to enhance coverage and network capacity. The operator has deployed more than 4,000 massive MIMO, small cell and TDD sites across Delhi-NCR and 5,000 sites in Mumbai.

Issues and challenges

Despite the steady growth of the Indian 4G ecosystem, certain challenges continue to impede operators’ network expansion plans. For one, low tariffs are a huge challenge for operators. Low returns, coupled with a huge capex and high debt burden, put a dampener on operators’ expansion initiatives. Further, low returns on investment, regulatory burden such as right of way, high spectrum usage charges, taxes and spectrum prices, and litigation issues are the other challenges facing operators.

Despite 4G penetration in the Indian telecom space, poor connectivity and network congestion continue to pose challen­g­es for operators. Although 4G coverage in urban areas has improved significantly, ru­ral penetration is still limited due to the lack of infrastructure, limited backhaul capacity and inadequate ecosystem readiness.

The way ahead

Despite the 5G hype, 4G will continue to be the dominant technology in India for the next few years, primarily due to an underdeveloped 5G ecosystem. According to Ericsson, LTE mobile subscriptions are expected to reach 1,150 million by 2024, representing 81 per cent of all mobile subscriptions. The surge in 4G data consumption will be driven by increased smartphone penetration, migration of users to 4G and rise of over-the-top services. Further, with operators’ efforts to expand 4G coverage in remote areas, the technology will steer the country towards greater digital growth.