Shweta Mungre moneycontrol.com
The deluge of new smartphone launches in India over the past few years presents a rosy picture of growth opportunities, not only for handset makers but also telecom industry.
But quarterly smartphones shipment data by the International Data Corporation suggests penetration is, at least temporarily, losing steam.
As per IDC, the first (April-June) quarter of FY17 saw a mere 3.8 percent year-on-year growth in smartphone shipments to 27.5 million units. This compares to a 5.4 percent growth in fourth quarter FY16 and about 15.3 percent in Q3FY16.
There could be a number of reasons for this: a note by broking house Edelweiss says weak economic growth, postponement of handset purchases by users waiting for new launches or falling discounts on e-commerce portals could be some.
The slowdown in shipment growth comes as a rude shock, given the fact that the smartphone market virtually doubled in 2014 year-on-year and grew at a steady clip in 2015 (28 percent).
Edelweiss says that the slow pick-up in smartphone shipment growth puts at risk the widely-expected hypothesis that increase in smartphone penetration will lead to 400-500 million mobile broadband subscribers by 2020 from around 120 million currently.
The slowdown also has implications for the Indian telecom industry, which had clocked a robust triple-digit data volume growth in FY14 and FY15, boosted by proliferation of smartphones and increased 3G adoption.
The weak Q4FY16 shipment numbers reflected in tepid data volume growth of only 47.3 percent YoY for leaders Bharti Airtel, Vodafone and Idea put together in Q1 this year. In Q4FY16 the data growth was roughly 57.7 percent while for full year FY16, it was little over 70 percent.
Going forward, this would show up in data volumes for key telecom companies with a lag, says Edelweiss.
While analysts at the firm are cautious on implication of the sales slowdown on capacity utilisation, revenue growth and competition for telecom players, they hope good monsoon, oncoming festive season and a push by new entrants like Reliance Jio would boost shipments going forward.
A revival in shipments is particularly important given telcos are massively investing in physical infrastructure and spectrum to cater to the anticipated data surge.
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