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5G Era Set To Accelerate Revenue Generation For The Indian Telecom Sector

Techarc pegs 2024 as the game-changing year for 5G when the sales contribution of 5G smartphones will exceed half (54.5%) of the total smartphones sold.

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Celebrating its 4th anniversary, Techarc announced a special edition report, “India Smartphone – Big Picture 2025.” The report highlights key pointers on the outlook, key trends and challenges that are expected to be faced by the Indian smartphone industry. The report is based on the analyses done by Techarc along with interactions done with the ecosystem leadership representing the smartphone OEMs, channel partners, component suppliers and other key enablers of the smartphone industry in India.
5G introduction to boost revenue generation for the telecom sector:

As per the report, the Telecom sector in India is set to grow at a CAGR of 9.4% in the period 2020-2025. Within the same period, the smartphone industry will grow fastest among the three main segments at a CAGR of 15.9%.
With 5G rolling out soon later this year; a positive impact on the revenues of the industry is expected for the upcoming future. CAGR between 2023-2025 is expected to be at 10.1% in comparison with 8.2% for the telecom industry between 2020-2022. 

The increase in CAGR by 1.9 per cent points due to 5G is likely to give accelerated relief to the telecom sector in the country, after a decade of turbulence which saw the consolidation and winding up of several telecom operators from the map.

The report pointed out that there is a need to create a trinity between the Indian technology companies of whatever scale and skill, existing R&D centres in the public sector and the premier technology institutions like IITs, with the sole agenda of India becoming a technology provider globally in her techade. With 5G technology sprawling across the length and breadth of the country in the year 2023, the telecom industry is set to cross the ₹ 10 lakh crores threshold, and by 2025 the amount will ramp up further to ₹ 13 lakh crores.

Going Up and Up

Smartphones have changed the entire dynamics of revenues for the telecom industry. With its addition to the market pie, today consumers directly contribute for ₹2 out of every ₹3 earned by the telecom industry in India. The remaining ₹1 is through B2B revenues in terms of equipment and infrastructure purchase by the enterprises and the telecom operators. 

By 2024, new smartphone sales to cross the 200 million milestone:

Techarc estimates that in 2024, the new smartphone sales will cross the 200 million threshold for annual sales. This will be just double the number of 100 million smartphones sold in early 2016. It is interesting to point out the fact that it just took a little over 11 years to cross the 100 million mark in selling smartphones in the country. With a shift towards premium (₹25,001-50,000) and luxury (₹50,001 and above) segment buying, although the unit sales of smartphones will witness 8-11% growth annually, the revenue sales will grow in the range of 13-18% during the period. By 2025, Techarc estimates that smartphone sales will exceed ₹5 Lakh crores.

The true 5G years are yet to come in India which will be marked by the introduction of mass volumes in the ₹10,000-20,000 price range. Though, it is important that for extremely price-conscious segments, there are options in 5G available in sub ₹10,000 also. Still, looking at the previous trends and consumer behaviour, the mass opportunity is likely to fall in between the ₹10,000-20,000 price range.

Techarc pegs 2024 as the game-changing year for 5G when the sales contribution of 5G smartphones will exceed half (54.5%) of the total smartphones sold. However, this does not translate into the extinction of 4G smartphones anytime soon. In 2025, Techarc estimates sales of 77 million (36%) of 4G smartphones, the demand for 4G smartphones should continue even beyond 2030. Going by the trends, Techarc predicts 20-25 million 4G smartphones being in demand even by 2030.

Techarc estimates that foldable smartphone sales will touch the 1 million mark by 2025 with at least 5 brands making them available for commercial sales. However, Samsung is expected to maintain the lead in this niche smartphone segment.

Booms Day not Doomsday for offline channels:

The total expected smartphone sales generated through offline channels in 2022 stand at ₹133,449 crores as against ₹91,875 crores of revenue contributed by offline channels in 2014.  This is 45% more than what the offline channel was generating in 2014.  

The doomsday for the offline channel does not seem to have arrived, as it continues its growing contribution.

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