India’s mobile broadband (MBB) users have surged to 839 million, marking a significant rise from 7.2% in the previous year, with accelerated additions in August driven by the affordability of Reliance Jio’s 4G phones. The challenge remains in convincing feature phone users to switch to pricier plans, but industry leaders anticipate continued growth in 4G subscriptions during the festive season and the fiscal year. Telecom data reveals a 16% decrease in non-MBB (2G) users to 309 million in the 12 months through August. The 12% drop in 4G smartphone pricing is expected to drive growth through 2G conversions.
The telecom sector added a record 7.6 million 4G users in August 2023, surpassing the 4.6 million monthly average in the previous year. Jio led the additions with 3.2 million users, followed by Airtel (2.6 million) and Vodafone Idea (1.3 million). Analysts project sustained 4G user growth, emphasizing the importance of 2G to 4G conversions for telcos to enhance average revenue per user (ARPU). Despite the July launch of Jio Bharat device, the pace of 2G to 4G upgrades remains a concern.
Nitin Soni, Senior Director of Corporates at Fitch Ratings, anticipates a continued surge in 4G user additions. He emphasizes telcos’ motivation to prioritize rapid 2G to 4G conversions in both urban and rural areas to boost data consumption and ARPU. The decline in the average selling price of 4G smartphones by 12% from March to September contributes to the growth, with 4G feature phone shipments rising by 300% year over year in the September quarter. However, 2G feature phone shipments saw a 27% decline during the same period.
Despite reporting sequential ARPU increases in the fiscal third quarter, Jio, Airtel, and Vi continue to navigate the challenge of transitioning users to 4G amid changing market dynamics.
