The Indian telecom sector will undergo significant changes that are expected to reset the industry’s development trajectory and create income, claims the premier professional services provider Deloitte.
The union cabinet’s recent measures have provided relief to the cash-strapped sector, which will encourage investments in 5G equipment. A PLI programme worth US$1.62 billion has also been authorised by the cabinet for the telecoms and network equipment manufacturing businesses.
Increase in smartphone users by 2026
In 2021, India had 1.2 billion mobile subscribers2, with roughly 750 million of them using smartphones.
According to Deloitte, the smartphone market is predicted to surpass 1 billion users by 2026. Between 2021 and 2026, the rural sector is expected to develop at a CAGR of 6%, while the urban sector is expected to grow at a CAGR of 2.5 percent.
Need for smartphones is predicted to rise as more people use the internet; this demand will be fueled by the need to adopt fintech, e-health, and e-learning.
Mobile gadgets are being replaced
In the urban sector, a mobile device has a three-year average lifespan. According to their estimate, in the urban market in 2026, 95% of replacements will be for new smartphones, while just 5% will be for used phones, compared to 75% and 25%, respectively, in 2021.
The rural population is predicted to follow a similar pattern, with a four-year average phone lifespan.
In the urban area, feature phone replacements will reach 60 million in 2026, up from 72 million in 2021. In the rural sector, replacements will reduce to 60 million in 2026 from 71 million in 2021.
5G’s impact on the new market
According to Deloitte’s estimate, smartphone demand in India is predicted to grow at a CAGR of 6% from 300 million in 2021 to 400 million in 2026.
This significant demand is expected to emerge largely following the debut of 5G, which is expected to account for 80 percent of all devices (about 310 million units) by 2026.
Due to its numerous uses, such as high-speed gaming and remote healthcare, 5G is expected to become the most widely accepted mobile technology. By 2026, incremental smartphone shipments following the debut of 5G are estimated to total 135 million.
Over the next five years, total smartphone sales in the nation are predicted to exceed 1.7 billion, generating a market worth over US$250 billion, with nearly 840 million 5G handsets likely to be sold.
From 2022 onwards, 5G adoption will expand year over year, resulting in an increase in 5G smartphone sales in India.
Given the growth of the digital ecosystem and the industry’s attempts to produce inexpensive 5G devices, it will phase out the 3G mobile network.