The Indian wireline broadband market is expected to move towards bundled plans, integrating wireline voice, home broadband and television services is estimated to potentially generate Rs80,000 crore in revenue in five years by ratings agency ICRA.
In a release Wednesday, the agency added that with bundling and higher competition, the pricing is expected to reduce by as much as 40-50%.
High price elasticity and expanding demand for data means wireline broadband subscriber base can witness strong growth, similar to what was observed for wireless broadband.
It added that over the next five years, home broadband and DTH market would see a greater role of telecom operators with a higher subscriber base and revenue generation. But the key elements for the industry would be the extent of competitive intensity and capex requirements.
ICRA said India's wireline broadband subscriber base can increase to 100 million households over the next five years, and the revenue generation from these segments could expand to Rs 80,000 crore as against Rs 14,500 crore now from wireline voice, home broadband and DTH services, with the combined ARPU of Rs 875.
Wireline broadband penetration in India is much lower than international standards and presents a significant opportunity for telcos, Harsh Jagnani, sector head & vice president – corporate ratings, ICRA said.
As on September 2018, the subscriber base was only 18 million, accounting for less than 7% of the total households, much lower than 44% in Brazil and 99% in France. In the television segment, while the total penetration is around 66% of the total households, of this, around 65% are provided over copper cable with limited capability for high bandwidth services.
In India, wireline broadband coverage would largely expand through the Fibre-to-the-Home (FTTH) networks with capability to deliver high speeds with network stability. "This will allow it to be the bedrock for content delivery to homes, thereby encompassing an umbrella of services including wireline voice, wireline broadband and television. Increasingly, the television industry is shifting towards content on demand and high-quality videos/content," ICRA said.
The telecom industry has been witnessing turbulence over the last few years with intense competition leading to a sharp decline in tariffs. The active subscriber base has largely remained stagnant, while revenue declined considerably, with no immediate respite in sight.
"In such a scenario, wireline broadband can be the next growth driver with potential to subsume television/DTH services, also providing diversification from the mobile services revenues," ICRA said.
Internationally, in order to monetise wired broadband networks (copper or FTTH) better, players in many mature markets like USA, UK and Germany offer integrated services – television, wireline services and home broadband through a single tariff plan, at a discount to the individual services. A similar trend is expected to play out in India as well.
“Even at a penetration level of 30% of the households, this could translate into a subscriber base of 100 million by FY2024, generating revenues to the tune of Rs. 80,000 crore. Correspondingly, revenue contribution from these services is expected to increase from current 8% to around 30% on an expanded revenue base," Jagnani said.
As in case of wireless, where the pricing levels have become non-remunerative, a similar impact on the wireline broadband remains a risk. Also, as of now, the industry has fibre network of 1720000 route km. Much deeper and wider penetration is required to be able to meet the envisaged FTTH demand, which will encumber the financials of the telcos.