The most significant event for the Indian telecommunications industry in 2021 was the slew of reforms announced by the government. For the last several years, there has been a growing disenchantment between the administration and the industry, but the announcement of the reforms put that to rest.
Apart from the delay in the launch of 5G services, Vodafone Idea's worsening financial condition, which led to the reforms, developments in the satellite space and rate increase by the telcos were the key themes of 2021 in India.
The 5G delay
In spite of much anticipation, the 5G spectrum auction did not take place in India in 2021. The auction was postponed because of the severe Covid-19 wave in April and May. However, there was headway in developing the 5G ecosystem as the Department of Telecommunications (DoT) awarded spectrum to the telcos for six months to conduct 5G trials and develop India-specific use cases. This period was later extended for another six months at the telcos' request. All the service providers, Reliance Jio, Bharti Airtel and Vodafone Idea, have conducted several 5G tests over the last few months.
The government has announced that a 5G spectrum auction will be held in the April-May time range of 2022, and as per media reports, the target is to launch 5G on August 15, India's Independence Day. Typically, India lags behind developed countries in the adoption of new technologies. The government was keen to change this with 5G, but launch in 2022 puts it way behind other countries.
The rate hike
The year ended with all the three major telcos, Bharti Airtel, Reliance Jio and Vodafone Idea, increasing the rates in the prepaid segment. India is an intensely competitive market, so a rate hike is rare. The last increase in rater was in 2019. Bharti Airtel was the first telco to increase the rates, followed by Vodafone Idea and Jio.
The rate hike is important because the financial health of the Indian telcos is poor, and this will not only help them garner funds for auction in 2022 but also allow them to upgrade the networks for 5G. There is also a possibility of an increase in the rates in the postpaid segment.
The government announced several policy changes in September 2021. A four-year moratorium for payment of Adjusted Gross Revenue (AGR) and other dues, change in the definition of AGR, 100% Foreign Direct Investment (FDI), spectrum sharing and single-window clearance for Right of Way (RoW) were some of the measures announced by the government. The industry welcomed these measures as they were in line with its longstanding demands.
The trigger for the measures was Vodafone Idea's plight. The carrier was staring at bankruptcy because of massive debt of around $24 billion, mainly because of AGR and several other government dues.
The satellite scene heated up in the country with the entry of several international satellite service providers like Elon Musk's Starlink, Amazon's Kuiper and Bharti's OneWeb in India.
Starlink was in the news for pre-booking clients even when it is yet to acquire required approvals from the Department of Telecommunications. The company has now suspended the sale of satellite services until it gets the license. Both SpaceX and OneWeb are likely to launch satellite services in the country in 2022.
A major controversy in this segment is the conflict between the service providers and satellite players regarding the spectrum. The service providers are asking for a level playing field with the satellite players, which means that they should bid for spectrum, just like telcos. However, the satellite players disagree with this. The coming year is likely to witness heated activity in this segment.