Swedish telecom equipment maker Ericsson said that India is of strategic importance to the company not only for its size but also due to the latest technology it demands as it aggressively expands its 5G network. In an exclusive interaction with Moneycontrol’s Danish Khan, Börje Ekholm, President and Chief Executive, said that data growth will continue in India even as the pace of capital expenditure by Indian telecom operators normalises in 2024. He also said that the availability of a nationwide 5G network will spur local innovation and entrepreneurship, resulting in new 5G use cases, and helping telecom operators to monetise their network investments. Edited excerpts:
How do you assess India's performance in 2023, even though in Q4, Ericsson saw a decline in sales?
The build-out of 5G in India was unprecedented compared to anywhere else in the world. That's what happened during the 2022-end and 2023 calendar year. We always knew that it was going to continue at a different pace. So, we expected more normalisation, but that happened faster. So we saw a slower October-December (Q4) quarter. That's only natural, given the pace of the rollout.
But we have strengthened our market share and have a better footprint in India, and we expect to do better than that in the future.
How do you see India doing in 2024?
What's more interesting, which needs to be discussed, is that India was never a front-runner regarding the latest technology adoption. India used to get older-generation technology for the network rollout. But with 5G, that changed. Today, we are rolling out the most modern solutions in India because of customer demand. Data growth continues along with the use of wireless connectivity. We need to match the growth with the latest technology.
India today is not only a large market but also a front-runner market in defining what solutions will be needed. That's why it is of strategic importance. India is not just important due to its size, but it is also important to drive the latest technology.
Do you see Indian telcos expanding their network at a much lower pace in 2024?
It will slow down a bit in 2024. But India will see innovation coming in with nationwide coverage of 5G. India will see entrepreneurs using network technologies to develop new use cases. It already has fixed wireless access as the primary use case, which will drive further network investment. We will get new use cases we have yet to learn.
Do you see India taking the lead in developing use cases?
India is well positioned because it has been robust in tech, as it started with outsourcing and service delivery; in reality, that's built up many competencies, which will be unleashed with nationwide coverage of 5G. Indian entrepreneurs will start to leverage these competencies and capabilities. When you think about India, we need to consider how entrepreneurship and innovation will also begin to spur the economy. The next unicorns may be based in India for that simple reason.
How do you see the telecom market structure in India?
India is unique as it allowed consolidation to become a market with fewer players. Once consolidation was done, there was enough scale for the operators to invest and build the network. It stimulated network investments. We saw the same thing in North America. On the other hand, if you look at Europe, where there are at least four in each market — effectively hundreds of operators in the region — none of them reached this scale.
An average operator in Europe has around five million subscribers, whereas in India, the average per operator is 200-300 million subscribers. Maintaining this type of scale is critical to having a sound market structure, as it allows for investment.
India and the regulator have done an excellent job at this.
India is planning to hold the next round of spectrum auction. What are your views?
If a regulator thinks about releasing spectrum to the industry in advance, that is very good for the country. The limiting factor in global cellular connectivity is the spectrum. So releasing spectrum and making that available at terms where you incorporate build-out conditions and not only the upfront price is critical for the industry to drive the country's digitalisation.
How do you see BSNL's planned comeback with indigenous, stack-based 4G?
India is a very advanced data market. An Indian consumer is a hefty data user, and India has one of the highest data consumption rates in the world. And that requires a reliable network, a high-performance network. We'll see how it works out for them (BSNL).
Do you see the global telecom market contracting for equipment makers?
5GThe overall market for our mobile networks will decline in 2024. India is normalising in terms of network investments, and operators in other markets are being more restrictive. It's a reasonable forecast to assume it will shrink in 2024.
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