Pivotal Role: Fibre set to transform India’s digital infrastructure

India’s fibre market is set to play a pivotal role in bolstering the nation’s digital infrastructure, which is crucial for the rapid digital transformation that is under way. As demand for high-speed internet and robust digital services continues to surge, the need for extensive and reliable fibre networks becomes increasingly critical. This dynamic market is influenced by various factors driving both demand and supply, shaping the future of connectivity in the country.

Growing demand for fibre in India

The demand for fibre in India is expected to rise significantly in the coming years, driven by several key factors. First, the fiberisation of telecom towers is critical to support the growth of mobile traffic. With the increasing uptake of mobile broadband and data usage, robust and high-capacity fibre networks are essential. India aims to fiberise approximately 700,000 mobile sites by fiscal year 2029, achieving a fiberisation rate of 63 per cent. This expansion is crucial for supporting the burgeoning mobile traffic and ensuring seamless connectivity across the country. Fiberisation of telecom towers will not only enhance the quality of mobile services but also pave the way for the deployment of 5G technology, which requires high-speed and low-latency networks.

Another significant factor is the extensive deployment of fibre-based fixed broadband networks (FTTx) for premise connectivity. India’s fixed broadband (FBB) penetration has been lagging behind other Asian markets due to supply-side constraints. However, the rapid deployment will help in easing-out the supply constraints in India, necessitating significant investments in the FTTx network by Jio, Airtel and other internet service providers (ISPs). Growth is expected to be pushed by the plans of Jio, Airtel and other ISPs to increase the number of FTTx premises passed; as well as the launch of Air Fibre, which allows ISPs to reach sub-urban and rural areas at lower costs. This is being complemented by contributions from others. By fiscal year 2027, India’s FBB penetration is expected to reach approximately 19 per cent from the current 13 per cent, translating to around 115 million non-unique FTTx premises passed. The expansion of FTTx networks will significantly enhance internet speeds and reliability, supporting the digital transformation of businesses and households across the country.

In addition to telecom tower fiberisation and FTTx deployment, the demand for fibre from data centres is also rising. Although the demand for fibre from data centres is smaller in terms of volume compared to other segments, the sector remains a crucial growth driver for fibre deployment in India. As data centre capacity expands to accommodate the increasing data storage and processing needs, the demand for high-speed and reliable fibre connectivity will rise. Data centres are essential for supporting cloud services, big data analytics and other digital applications. With the proliferation of digital services and the increasing adoption of cloud computing by businesses, the construction of new data centres and the expansion of existing ones will drive the demand for fibre networks. The growth of data centres in India is also being bolstered by favourable government policies and investments from both domestic and international players.

Supply of fibre in India

The supply side of the fibre market in India is dominated by large telecom operators and state-owned enterprises. More than 95 per cent of the fibre infrastructure is owned by these entities, with the remaining share held by smaller fibrecos with limited scale.

Major telecom operators in India, such as Reliance Jio, Bharti Airtel and the state-owned Bharat Sanchar Nigam Limited (BSNL), own and operate extensive fibre networks. These operators have been investing heavily in expanding their fibre infrastructure to support the growing demand for high-speed internet and digital services. Reliance Jio has the largest intracity fibre holding across India. Jio’s fibre network has been laid out over the past five years and thus offers a high quality of service (QoS). Even though BSNL also has extensive fibre holding, its QoS is relatively lower. Bharti Airtel, on the other hand, has deployed approximately 40,000 route km (rkm) of fibre annually in the last couple of years. Airtel’s network is well maintained and offers reasonably high QoS. Vodafone Idea and Tata Communications are the two other telecom operators with extensive fibre networks.

In addition to large telecom operators, state-owned enterprises such as RailTel and Power Grid Corporation of India Limited (Powergrid) also play a crucial role in the fibre market. RailTel, a subsidiary of Indian Railways, owns an extensive fibre network along the railway tracks, providing connectivity to railway stations and other locations. Powergrid, an electricity company under the Ministry of Power, maintains an overhead optic fibre network using optical ground wire on power transmission lines. These state-owned enterprises contribute significantly to the overall fibre capacity in the country.

Besides the major players, there are smaller fibrecos that operate on a wholesale or turnkey basis. Vindhya Telelinks Limited, Dinesh Engineers Limited, CloudExtel and Microscan are some examples of wholesale fibrecos in the overhead and underground fibre cable segments in India. These companies typically have limited scale and focus on specific regions or segments of the market. They provide fibre infrastructure to telecom operators, ISPs and other entities on a wholesale basis, enabling them to expand their network reach without investing in their own fibre infrastructure. There is also a long tail of local players in every circle (such as local cable operators) who also offer fibre on a wholesale basis. While the contribution of smaller fibrecos to the overall fibre market is relatively low, they play a crucial role in filling the gaps in the network and providing connectivity in areas that are not covered by larger players.

Future outlook

The fibre market in India is expected to grow from 2.8 million rkm in 2023 to 3.6-3.8 million rkm by 2028. This growth will be driven by the factors discussed above, including fiberisation of telecom towers, extensive FTTx deployment and expansion of data centres. Government initiatives such as the BharatNet project, which aims to provide high-speed broadband connectivity to rural areas, will also contribute to the growth of the fibre market. Additionally, the implementation of 5G technology and the increasing adoption of digital services will further drive the demand for robust and high-capacity fibre networks.

In conclusion, the fibre market in India is poised for significant growth, driven by the increasing demand for high-speed internet and digital infrastructure. While the supply side is currently dominated by large telecom operators and state-owned enterprises, there is ample opportunity for smaller fibrecos to play a crucial role in expanding network reach and addressing the connectivity needs of the country. Continued investment in fibre infrastructure will be essential for supporting India’s digital transformation and ensuring that the benefits of high-speed internet reach all corners of the country.