The Indian telecom industry is the second largest in the world by number of subscribers. The sector has witnessed exponential data growth over the last few years primarily driven by affordable tariffs, wider availability, roll out of Mobile number portability (MNP), 3G and 4G, evolving consumption patterns of subscribers and conducive regulatory environment. The telecom sector has grown at 19.6% CAGR in terms of subscriber base and at 7.07% CAGR from a revenue perspective over the last few years. Private access service providers hold major part of market share of the wireless subscribers.
According to GSMA intelligence (GSMAi), 208 million new subscribers will get connected in India by 2025, accounting for a quarter of global and half of regional [Asia-Pacific (APAC)] new subscribers over 2017-2025 period.
Mobile data usage per month in India has increased from 39 Petabytes in June-2016 to 4178 Petabytes in September-2018 (Chart 1.2), thereby showing an increase of many folds. With the exponential growth in data usage, India has become one of the countries with highest mobile data usage.
On 22nd February 2019, the Telecom Regulatory Authority of India (TRAI) released a white paper on ‘Enabling 5G in India’. The TRAI notes that, globally, full scale deployment of 5G networks is expected to start by late 2019 or early 2020 and that pilots for these have already commenced. Key highlights from TRAI’s white paper on 5G includes:
- Committee expects mobile communication networks enabled by 5G technology will allow higher quality video services with mobility at high speed, business automation delivered through billions of connected devices, delivery of critical services such as tele-surgery and autonomous cars assured by low latency and ultra-reliable networks, and improved productivity assisted by high quality, real time data
- According to 5G high level forum 7, 5G is expected to be launched in India by 2020 and is predicted to create a cumulative economic impact of USD 1 trillion in India by 2035. As per Ericsson, 5G enabled digitalization revenue potential in India will be above USD 27 billion by 2026. GSMAi projects that after initially launching in 2020, 5G connections in India will grow to almost 70 million by 2025, equivalent to around 5% of total connections.
Optic fiber is the key back-bone for the 5G infrastructure and this market is estimated to grow at a CAGR of 11.7% during the forecast period (CARE Report) 2016 – 2025 and accounts for USD 27.88 billion in the year 2025. Based on end-user, the optical fiber market can be further divided into Broadcast, IT & Telecom, and Industrial, Defence, Medical and Others. One of the prime factors that are driving the demand for optical fiber cables is the growing needs for fast and improved networking and network services and growing penetration of broadband connections among developed and developing countries.
Optical fiber Cable (OFC) continues to be the backbone for connecting users to digital world. With rapid spread of broadband connectivity and increasing usage of internet towards online financial transactions and sharing of confidential data, the need for secure transmission of data is gaining prominence. Exponential increase in the digital population and a consequential explosion in data consumption are necessitating the increase in carriage capacity and speed of the OFC network.
As per CISCO report, global IP traffic is expected to increase nearly threefold over the next 5 years: Overall, IP traffic is expected to grow at a Compound Annual Growth Rate (CAGR) of 24% from 2016 to 2021.
India’s current fiberization stands at 25% in comparison to developed countries which stands at 70% ‐80%. With increasing fiberization and government thrust on increasing connectivity there’s a strong demand for optic fiber manufacturers going ahead. While the demand for fiber cables has increased in the domestic market, the global demand for fiber cables has also increased exponentially over the last 12 years. In CY 2005 the demand for cables stood at 75 million fiber kilometers, it has grown to 493 million fiber kilometers in 2017.
Global Industry Trend:
China & Japan:
- Heavily investing for upcoming projects for ultra -broad band applications.
- China Mobile telecom operator is planning to start large scale 5G trials in 2019
- US is planning to invest USD 130- USD 150 billion in next 5 years for 5G network.
- Verizon, Sprint, AT&T and T-mobile are currently running 5G trials in US and are planning to expand 5G network across US.
- First-ever official demonstration of 5G started at winter Olympics 2018– South Korea will pump 1.6 trillion Won (USD 1.49 billion) through 2020 with local firms to build the 5G network in the country.
- Japanese telecom companies are planning to invest USD 46 billion into delivering nationwide 5G coverage by 2023
- The first live 5G networks are expected to come on stream in parts of Tokyo and other select areas ahead of the 2020 Tokyo Olympics.
- Japan is planning to invest around USD 400 billion during 2020-2030-time frame for 5G network.
- Digital India mission by Prime Minister
- Smart Cities driving optic fibre demand
- BharatNet scheme is helping to improve rural broadband connectivity
- Bharti Airtel has started with Initial Infrastructure deployment
- TRAI expects initial roll out of 5G by the end of 2020
Historically 80% of global fibre demand is driven by these 5 countries.
Shift towards Optic Fiber cables is inevitable due to its speedier data transmission, lower latency and larger radius connectivity. In the 3G phase, the major focus was connecting more and more individuals to internet whereas 4G phase led to an exponential increase in consumption of data. With 5G coming into play, there will be an accelerated shift towards digital lifestyle by enabling internet of things/AI/cloud for carrying out basic day-to-day activities. With many demanding requirements on data capacity and speed, the replacement of the backbone of the global communication network from copper to Optic fibre is inevitable. However, currently the supply – demand mismatch in the optic fiber industry has led to 40%-50% fall in spot prices of optic fiber. Steep fall in prices is a short term risk but demand for optic fiber products is intact.