Interview with Purushothaman KG: “The telecom sector stands on the brink of a significant transformation”

The Indian telecom sector has undergone a remarkable transformation over the past 25 years, evolving from a monopolistic, heavily regulated market to one that is dynamic, competitive and critical to the nation’s digital and economic progress. With significant advancements in technology, market liberalisation and the entry of private players, the industry has become a key enabler of India’s digital inclusion and connectivity. In an interview with tele.net, Purushothaman KG, Partner, Head Technology Transformation and Sector Head, Telecommunications, KPMG in India discussed the progress over the years, supportive government initiatives, and the strategic areas that require attention to ensure the sector remains competitive and sustainable in the years to come. Excerpts…

How would you assess the progress in the Indian telecom sector over the past 25 years? What were the key drivers of change during this period? 

Over the past 25 years, the Indian telecom sector has transformed significantly. From a heavily regulated monopoly to a highly competitive market with widespread mobile penetration, driven primarily by market liberalisation policies, the entry of private players, technological advancements and a sharp decline in tariffs, the sector has come a long way. Mobile services have become affordable for the masses, contributing significantly to India’s digital inclusion and economic growth.

The most significant driver of change was the introduction of market liberalisation in the 1990s, which allowed private companies to enter the telecom sector. The rapid evolution of mobile technology, from 2G to 3G, 4G, 5G, and now embarking on 6G, is set to deliver faster data speeds and new services, further boosting adoption. Intense competition among telecom players led to a dramatic reduction in call and data tariffs, making mobile services accessible to a large section of the population. Further, the establishment of the Telecom Regulatory Authority of India in 1997 was a key milestone, as it allowed for the separation of regulatory functions from policymaking and operational duties, which remained under the control of the Department of Telecommunications.

Multiple government initiatives, such as Digital India, Make in India and Skill India, have heightened the focus on rural connectivity and pushed driven efforts to increase mobile penetration in the remotest of regions. These initiatives have been instrumental in enabling the Indian telecom sector to play a leadership role in an increasingly knowledge-intensive global landscape scenario.

What are your views on the current telecom scenario? What are the major gaps in the sector?

The telecom sector stands on the brink of a significant transformation. Fuelled by rapid technological advancements and shifting customer expectations, the industry is poised to play a pivotal role in shaping the global digital economy. As new technologies like 6G and artificial intelligence (AI) take centre stage, telecom companies should navigate the dual responsibility of advancing technological progress while remaining committed to social and environmental goals.

According to the KPMG in India – IMC Report 2024, “Redefining TMT with AI”, 55 per cent of telecom companies in the country have already implemented AI at scale, with another 37 per cent actively scaling their solutions. However, as telcos accelerate AI integration and embrace generative AI as a cornerstone for sustained growth and profitability, the sector faces a pressing challenge – a shortage of skilled professionals. While projections indicate an excess of 1.3 million skilled workers in India’s technology, media and telecommunications (TMT) sector by 2030, the present reality reveals a gap of approximately 150,000 professionals in critical domains such as 5G, AI/big data analytics, and robotic process automation.

How have telcos’ business models changed over time? What should be their key focus areas in the coming years to drive revenue growth?

Telcos have shifted from primarily selling basic voice and data minutes through their networks to a more diversified model. Their focus is now on offering a range of digital services such as cloud computing, cybersecurity and internet of things (IoT) solutions, alongside their core connectivity, as they adapt to the growing demand for data and new technologies, essentially transforming from “network operators” to “technology service providers” to stay relevant in the market.

As the industry rapidly evolves, telcos must leverage 5G monetisation opportunities, expand into enterprise services with private 5G networks, and prioritise digital transformation to enhance customer experience. Embracing AI and data analytics for network optimisation and transitioning towards a “telco to techco” model by developing new value-added services beyond basic connectivity could also help scale revenue growth.

What are your views on the evolving 5G ecosystem in India, particularly with respect to 5G monetisation?

The 5G ecosystem in India presents significant opportunities for growth, particularly in enterprise solutions, IoT and consumer services. Monetisation will be driven by high-speed internet, enhanced entertainment and tailored business-to-business services. However, I believe that the high cost of deployment, vendor ecosystem and intense market competition pose hurdles.

As a result, telecom operators will need to innovate with value-added services and strategic partnerships to unlock new revenue streams. Factors such as private networks, network-as-a-service models, and collaborations with over-the-top platforms will be crucial for success. Overall, the ability to balance investment and sustainable revenue growth will determine the success of 5G in India.

What will be the key emerging trends that will shape the telecom infrastructure space?

The adoption of digital technologies, coupled with automation and AI, is reshaping the telecom landscape. As AI becomes integral to telecom operations and services, the need for responsible AI practices will become paramount.

The telecom industry in 2025 stands at an exciting juncture, characterised by rapid technological evolution and an expanding role in the global digital ecosystem. By embracing AI and automation, diversifying into new markets, transforming core technologies, advancing 5G and 6G, and prioritising ethical AI practices, telecom operators are setting the stage for long-term growth and resilience. As these trends unfold, the sector will not only enhance connectivity but also create new possibilities for businesses, governments and individuals, reinforcing its position as a cornerstone of the digital future.

What is your outlook for the sector for 2025? What are some of the major areas that need immediate regulatory attention?

The increase in compensation for telecom service providers from Rs 137 billion to Rs 284 billion, as announced in Union Budget 2025, is expected to stimulate infrastructure growth, enhance network quality and support faster deployment of 5G services, benefiting both providers and consumers. Moreover, the budget’s focus on supporting and driving India’s deep-tech start-ups, integrating AI into education and enhancing telecom infrastructure is poised to drive innovation and growth in India’s TMT sector.

While the emphasis on ease of doing business and regulatory simplification has the potential to create a more conducive environment for industry players, areas such as efficient allocation, pricing and spectrum sharing policies are crucial. These will help ensure equitable access and reduce the financial burden on telcos.

With the growth of digital services, there is a pressing need for stronger data protection regulations to safeguard user privacy. Another area that needs attention is streamlining the process for sharing telecom infrastructure and securing right-of-way approvals to help reduce costs and improve coverage, especially in rural areas of the country.