Shah, Vice President, Media Partners Asia, shares interesting insights on how the telecom sector will impact the digital economy
By the end of 2020, India will have nearly one billion mobile users, with close to 70 per cent on 4G network. It is the second-largest market in the world behind China, which is largely closed to strategic international investors. No wonder global strategic investors are looking at building partnerships with Indian telecom companies.
In a conversation with exchange4media, Mihir Shah, Vice President, Media Partners Asia, spoke about how the telecom sector will impact the digital economy.
Last month saw a slew of strategic and financial investments in the sector. What are investors chasing?
India is the key battleground for global strategic investors looking to build brands and partnerships to take a big chunk of the content, commerce, and connectivity pie that the market has to offer. On the other hand, pre-COVID, private equity investors had US$1.5 trillion in cash and have been eager to deploy in attractive geographies and scaled assets like RIL and Airtel. India’s telecom industry will generate more than US$20 billion in revenue this year with US$18 billion from mobile and US$2 billion+ from home broadband. The total revenue is expected to reach US$36 billion by 2025 – US$32 billion from mobile and US$4B from home broadband.
What impact did the telecom sector have on the digital economy?
The Jio blitzkrieg in 2016 brought in the first wave of India’s data revolution. This, bundled with an aggregated suite of entertainment services, established the base and mid-layer of telecom offerings. To date, entertainment applications, primarily video, have been a major driver for data traffic for telcos. The next wave will be centered around ‘phygitalization’, connecting India’s informal sectors to online platforms. This, we believe, will give a major fillip to India’s start-up, SMB, and the digital economy at large.
With tech-telecom majors joining hands, what does it mean for traditional and incumbent players in the media sector?
Jio’s blitzkrieg launch in 2016 fostered the growth of online video in India. The late 2019 foray into home broadband is already altering the dynamics of the traditional pay TV business in urban India. With e-commerce and a suite of scaled digital services (housed under Jio Platforms), the telco major will soon make a big splash in the vast digital advertising arena.
How do you see the home broadband segment evolving in India?
Traditionally, India’s fixed broadband sector has remained subscale. The recent lockdown has provided the necessary shot in the arm to reinvigorate growth in the sector. Confined to their homes, a typical household is already exploring multiple use cases for high-speed broadband, including video conferencing, online education, video streaming on connected-TVs, amongst several others. On the supply side, India’s two major telcos – Jio and Airtel – now having a strong balance sheet, and are making substantial investments to deepen their intra-city fiber deployments. In the next five years, 75% of India’s fixed broadband homes will be catered through FTTx.