In a surprising turn of events, India’s mobile broadband user base has experienced a substantial 7.2% growth over the past year, crossing the remarkable 839 million mark. The surge, particularly evident since August, is attributed to the widespread adoption of Reliance Jio’s budget-friendly 4G-enabled device.
While the industry has been struggling with enticing feature phone users to migrate to more expensive plans with higher profit margins, the recent spike in 4G subscriptions indicates a positive trajectory. Analysts and industry executives express optimism, anticipating sustained growth throughout the festive season and the remainder of the financial year.
Jio Bharat Device Reshapes the Game
Analyzing the data, it’s clear that Jio’s strategic move with the Bharat device has had a significant impact. Nitin Soni, Senior Director at Fitch Ratings, sheds light on the scenario, stating that the sharp growth in mobile broadband user additions from August 2023 suggests a robust adoption of the Jio Bharat device.
Industry Outlook: Sustained Momentum and Potential Challenges
The growth in 4G user additions is expected to be fueled by conversions from 2G, aided by a recent decline in 4G smartphone prices. With headline tariffs unlikely to rise soon, telcos are banking on these upgrades to boost average revenue per user (ARPU) in the competitive market.
Despite the positive outlook, industry executives and analysts caution that winning quality revenue-generating customers in high volumes will be a challenging task. The top three telcos reported sluggish sequential ARPU rises in the September quarter, with Jio, Airtel, and Vi registering 0.66%, 1.5%, and 2.1% sequential ARPU growth, respectively, despite substantial 4G user additions.
Driving Growth: 4G Conversions and Falling Device Prices
According to research firm IDC, the recent decline in 4G device prices is also anticipated to accelerate 2G to 4G conversions, with the average selling price of 4G smartphones falling by almost 12% to $109 in the September quarter of CY2023.
In the same period, 4G feature phone shipments witnessed a staggering 300% year-on-year increase, with Jio Bharat-Version 1, Karbonn, and Jio Bharat-Version 2 collectively capturing 63% market share. In contrast, 2G feature phone shipments plummeted 27% year-on-year.
