INDIAN TELECOM SECTOR: GROWTH, CHALLENGES, WAY FORWARD

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Context

The Telecom Regulatory Authority of India (TRAI) released the “Indian Telecom Services Performance Indicator Report” for the quarter ending 31st December 2025 on 3rd March 2026.

What are the Key Highlights of the Report?

Subscriber Base & Teledensity

Total Telephone Subscribers: Increased to 1,306.14 million, marking a quarterly growth rate of 6.28%.

Overall Teledensity: Reached 91.74%, up from 86.65% in the previous quarter.

Urban vs Rural Divide:

• Urban Teledensity: Surged to an impressive 148.92%.
• Rural Teledensity: Showed marginal growth, reaching 59.63%. The share of rural subscribers in the total base decreased to 41.63%.

Market Share: Private sector operators dominate the market with a 92.17% share, while Public Sector Undertakings (PSUs) hold the remaining 7.83%.

Internet & Broadband Penetration

• Total Internet Subscribers: Grew to 1,028.61 million.
• Composition of Subscribers:
• Wireless Subscribers: A dominant 983.29 million.
• Wired Subscribers: A much smaller base of 45.32 million.
• Broadband vs. Narrowband:
• Broadband Subscribers: Increased to 1,007.35 million.
• Narrowband Subscribers: Declined to 21.25 million, indicating a user shift towards higher-speed internet.
• Internet Penetration Rate: The number of internet subscribers per 100 population stands at 72.24%.
• Data Consumption: Average data usage per wireless subscriber per month stood at 25.70 GB.

Broadcasting & Cable Services 

The broadcasting sector includes a mix of satellite TV channels, DTH services, and radio channels, with a large number of Free-to-Air (FTA) options available to consumers.

• Satellite TV Channels: A total of 920 private satellite TV channels have been permitted by the Ministry of Information & Broadcasting (MIB).
• Pay vs. Free Channels: Out of these, 335 are pay channels, while the remaining 576 are Free-to-Air (FTA).
• DTH Services: There are 4 private pay DTH service providers with a total active subscriber base of 50.99 million. This base saw a slight decline from the previous quarter.
• FM & Community Radio: As of December 2025, there are 385 operational private FM radio channels and 557 operational community radio stations.

What are the Challenges Related to the Telecom Sector?

Financial Stress and High Debt: Operators struggle with substantial debt and low Average Revenue Per User (ARPU) due to intense competition and price wars.

AGR Dues and Spectrum Costs: High spectrum fees and a long-standing, contentious definition of Adjusted Gross Revenue (AGR) have burdened companies with massive financial liability.

Rural-Urban Digital Divide: Rural teledensity severely lags urban, hindering comprehensive digital access.

Infrastructure and Quality of Service: Issues include poor infrastructure in rural areas, inadequate fiberization, and challenges with service quality, such as high call drop rates.

Regulatory and Policy Challenges: The sector navigates complex regulations on data privacy, security, and rapid technological shifts, now addressed by the new Telecommunication Act, 2023.

Emerging Technology Demands: The high cost of 5G rollout and the need for AI-driven infrastructure upgrades place further strain on finances.

OTT Competition: Over-the-Top (OTT) applications, which provide voice and messaging services without paying licensing fees, further disrupt traditional telecom revenues. 

Despite these challenges, the sector is investing in AI, 6G research, and expanding 5G networks, with government support to improve ease of doing business. 

What Measures India can Adopt to Reform the Telecom Sector?

Financial and Regulatory Reforms

Rationalizing Spectrum Pricing: Moving away from high upfront costs to a revenue-sharing model and offering longer payment periods (e.g., 20 years) to ease financial pressure on operators.

Restructuring AGR Dues: Implementing long-term, sustainable plans for AGR dues to alleviate the debt burden on Telecom Service Providers (TSPs).

Streamlining Licenses and Approvals: Using digital platforms like the Saral Sanchar Portal for faster, automated licensing, reducing regulatory hurdles, and promoting the Ease of Doing Business. 

Infrastructure and Technology Upgradation

Accelerating 5G and Rural Connectivity: Expanding fiber-optic networks, deploying satellite-based internet, and strengthening rural tower infrastructure to close the digital divide.

Encouraging Infrastructure Sharing: Incentivizing active and passive infrastructure sharing among telcos to reduce capital expenditure.

Indigenous Manufacturing (Atmanirbhar Bharat): Boosting local production of 5G equipment, semiconductors, and IoT devices to reduce dependency on foreign vendors. 

Policy and Security Enhancements

Regulating OTT Services: Ensuring a fair revenue-sharing mechanism between Telecom Service Providers and Over-the-Top (OTT) platforms (e.g., Netflix).

Cybersecurity and Data Protection: Implementing robust frameworks, such as Zero Trust Architecture and AI-driven threat detection, to protect critical digital infrastructure.

Way Forward

Focus on Meaningful Connectivity

Shift from merely providing connections to ensuring quality, affordability, and utility. This involves scaling up digital literacy programs like the Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA).

Strengthen Public-Private Partnerships (PPPs)

Utilize the BharatNet infrastructure to incentivize private telecom operators and internet service providers to deliver last-mile connectivity in rural and remote areas.

Ensure a Stable Policy Environment

A predictable regulatory framework for spectrum allocation, pricing, and usage rights is crucial to attract long-term investments required for next-generation technologies like 6G.

Boost Domestic Manufacturing

Continue the momentum of the PLI scheme to build supply chain resilience, enhance national security, and position India as a global manufacturing hub for telecom equipment.

Source: PIB