INDIA ERICSSON MOBILITY REPORT JUNE

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1 INDIA ERICSSON MOBILITY REPORT JUNE 2016

2 MARKET OVERVIEW Key figures: CAGR Mobile subscriptions (million) 1,040 1,370 5% Smartphone subscriptions (million) % Data traffic per active smartphone (GB/month) % Total mobile traffic (EB/month) % There will be 810 million n smartphone subscriptions by 2021 South Asia is projected to be a bright spot amongst developing economies, with being the dominant economy in the region, as well as the second largest telecommunications market in the world in terms of subscriptions. 1 The n economy is projected to grow by 7.4 percent in Liberal telecom policies, deregulation of foreign direct investment (FDI) and strong consumer demand have led to the rapid growth of the telecom sector in. There is a clear urban-rural divide in the telecommunications sector in. The teledensity in urban areas is three times higher than in rural areas, as of the end of 2015, and the divide is even higher for internet users. Internet subscription has huge growth potential in both rural and urban areas in, with total subscription at just 25 percent of the population. 3 Mobile broadband is set to dramatically increase, with smartphone subscriptions and total mobile traffic expected to increase four-fold and fifteen-fold respectively from 2015 to 2021 reaching 810 million smartphone subscriptions and mobile traffic of 4.5 ExaBytes (EB) per month. saw the highest net mobile subscription addition of 21 million in Q In, 16 percent of the population had a smartphone at the end of 2015, compared to 44 percent globally. The number of smartphone owners in will further increase to 58 percent by the end of 2021, while at the same point in time it is foreseen that 81 percent will have a smartphone globally. The growing smartphone penetration in is expected to fuel the growth of mobile broadband in the country. Mobile subscriptions by technology, (million) 1,600 1,400 1,200 1,000 LTE WCDMA/HSPA GSM/EDGE-only CDMA-only Shift in mobile technology Smartphone owners in will increase to almost 60 percent by 2021 and fuel the growth of mobile broadband usage 1 Economic Prospect Report, Worldbank (2016) 2 The Economist Intelligence Unit (2016) 3 Telecom Regulatory Authority of (2015) GSM still dominates the n market. In 2015, over 80 percent of mobile subscriptions in were GSM subscriptions. This is projected to grow until 2016 and decline thereafter due to operator initiatives to migrate 2G subscribers to 3G, decreasing handset prices and bundling of data with devices. WCDMA/HSPA and LTE networks are expected to gain momentum, and the subscriptions will together account for 65 percent of n subscriptions by At this point in time, CDMA-only technology is expected to be phased out. 2 ERICSSON MOBILITY REPORT INDIA JUNE 2016

3 Consumer priorities Data gaining prominence over voice for smartphone users in Calls and text messages are the top two activities of smartphone users. In, web browsing, ing and social networking are the top three internet activities on smartphones, which is aligned to the global trend. Around 15 percent of smartphone users in make online video calls daily, and this is similar to the global average. 4 ly, smartphone users show a higher tendency to pay a premium for better data services, as opposed to improving voice quality. In, young smartphone users aged years old drive this need for better data speed and data coverage, and have a higher inclination to pay a premium for the same. n smartphone users rate data as more important than voice, indicating the strong uptake of data services in the country. Data speed is considered to be the most important factor in determining both network performance and smartphone users satisfaction with their operator. However, smartphone users in are more satisfied with voice quality than data services. Mobile phone users in give more importance to voice quality than data services, indicating that it is the smartphone users who drive the need for better data services. Importance of voice and data services for mobile phone users Overall mobile phone users Data speed Data reliability Smartphone users 12% 13% 19% 24% Data coverage 13% 18% Voice coverage Voice reliability 14% 13% 21% 20% Data will become more important than voice as n consumers migrate to smartphones Voice quality 12% Source: Ericsson ConsumerLab Analytical Platform (2015), Base: Mobile phone users using the internet, years old 21% Willingness to pay a premium for service improvements in (percent) Voice quality Customer service Data speed and coverage Options for data packages Overall - age groups Source: Ericsson ConsumerLab Analytical Platform (2015), 24 countries including Base: Smartphone users, years old 4 Ericsson ConsumerLab Analytical Platform (2015), 24 countries including INDIA JUNE 2016 ERICSSON MOBILITY REPORT 3

4 Positive ICT attitudes Consumers in believe that technology could improve the quality and efficiency of their day-to-day lives. They feel secure when purchasing products or services on mobile devices, and believe that connecting household appliances, gadgets and services to the internet would benefit the economy and society. Over the past five years, they also believe that their technology usage has significantly increased. Internet activity is catching up with global levels In, one out of three internet users goes online daily, compared to almost half globally. 5 However, the nation s internet usage is catching up, and those aged years old have a high dependence on online access. The average weekly time spent online has increased in, but is still below the global average. Average weekly internet hours 6 20 Source: Ericsson ConsumerLab Analytical Platform (2015), 24 countries including Base: Internet users, years old Over 70 percent of n internet users consider being contactable online as important. Consumers in rely on reviews posted on online forums and express their views on blogs and social networks. Social forum feedback is trusted more than other sources, and around 90 percent of internet users in are part of at least one social networking group. 5 Consumers use e-commerce websites and mobile apps to purchase products online. Online product reviews influence purchasing, with over 25 percent of users in relying on the internet to research products and services before buying. 5 Smartphone usage is increasing in, specifically among younger generations; with over 77 percent of smartphone users aged years old using the internet on their smartphone every day. Smartphones are also widely used to browse the internet, with over 71 percent of consumers using it on a weekly basis, while more than one in two smartphone users play games and access s on their smartphone. 5 This increasing mobile broadband usage is also facilitating m-commerce activities. Around 40 percent of smartphone users aged years old purchase products using mobile payments on a weekly basis. Mobile banking activities are also increasing, with over 30 percent of users accessing banking websites via their smartphone, or using mobile banking apps Ericsson ConsumerLab Analytical Platform (2015), 24 countries including Positive attitude towards technology 60% Connecting household appliances, gadgets and services to the internet would benefit the economy and society 36% 63% 44% ICT helps me lead a more successful life through technology I feel secure purchasing products/services on my mobile devices 61% Source: Ericsson ConsumerLab Analytical Platform (2015), 24 countries including Base: Internet users, years old 26% Music streaming is more popular in In, streaming music and watching videos are the most popular forms of entertainment on smartphones. Around 50 percent of smartphone users stream music on mobile apps every week, and more than one in two internet users watch short online video clips on a weekly basis. The percentage of smartphone users streaming online music and watching full-length online videos in is higher than the global average. Weekly smartphone entertainment activities (percentage of smartphone users) Online music streaming Movies, TV and sports Video clips Source: Ericsson ConsumerLab Analytical Platform (2015), 24 countries including Base: Smartphone users, years old 4 ERICSSON MOBILITY REPORT INDIA JUNE 2016

5 Mobile app usage E-commerce apps growing in popularity Smartphone users primarily access the internet on their mobile devices in. With the projected growth of 3G and 4G subscriptions in, mobile app usage is expected to rise. Among n smartphone users, WhatsApp Messenger is the top mobile app, in terms of the number of n consumers, followed by Google Search and YouTube. E-commerce apps such as Flipkart, Paytm and Snapdeal are growing in popularity in. Mobile app usage is expected to increase with the projected growth of 3G and 4G subscriptions in File sharing app Xender is the top mobile app by average monthly data usage, followed by file sharing app SHAREit and the YouTube video sharing app. The mobile app user base is increasing due to its convenience and user-friendliness. Top mobile apps by number of users (percent) Average data usage (monthly GigaBytes) Facebook Messenger Google+ Facebook Reach in 2014 Reach in 2015 Flipkart WhatsApp Messenger Google Chrome Entertainment Social media Commerce/shopping Browser Communication Google Maps Gmail Google Chrome Instagram Google Play Store Facebook app UC Browser Productivity/tools Photography YouTube Google Search YouTube app SHAREit WhatsApp Messenger Xender Source: Ericsson ConsumerLab Analytical Platform, On Device Measurement (October 2015), Base: Android smartphone users, years old Future expectations: Peer-to-peer sharing and connected devices Online connectivity empowers people to share knowledge and resources with each other. Around 60 percent of smartphone users in have used a website or application to share with peers, compared to 40 percent globally. Peer sharing websites and applications are mainly used for travel, food and clothing. Around 30 percent of young smartphone users in have leveraged peer sharing websites or apps to rent a room in someone s house while traveling, compared to 15 percent globally Source: Ericsson ConsumerLab Analytical Platform, On Device Measurement (October 2015), Base: Android smartphone users, years old Internet users and smartphone owners in believe that connecting devices helps improve the efficiency of their everyday activities. TV, cars and cameras are the devices that they would most like to be connected. Internet users and smartphone owners aged years old are more interested in connecting devices than those who are older. 7 The n youth segment is driving data usage and trying out new data package services; thereby generating high value as consumers. 6 Ericsson ConsumerLab Analytical Platform (2015), 24 countries including 7 Ericsson ConsumerLab Analytical Platform (2015), INDIA JUNE 2016 ERICSSON MOBILITY REPORT 5

6 Mobile Traffic Smartphone traffic to grow seventeen-fold by 2021 Mobile broadband and mobile apps are used to access a wide range of services and information, and smartphone-driven cellular and Wi-Fi data traffic have high growth prospects in. The smartphone subscription base in is increasing, leading to exponential growth in mobile traffic. From 0.3 EB per month in 2015, total mobile traffic is expected to grow annually by 55 percent, reaching 4.5 EB per month by Data traffic per active smartphone is expected to increase five-fold from 1.4 GigaByte (GB) per month in 2015 to 7 GB per month by In 2021, 99 percent of the region s mobile traffic will be from data. Total smartphone traffic is growing seventeen-fold to 4.2 EB per month by Data traffic for other devices is also growing steadily and is expected to increase four-fold, between 2015 and 2021 to around 170 PetaBytes per month. Compared to data usage, voice has a low annual growth rate of 3 percent. In, data traffic per active smartphone is expected to increase five-fold between 2015 and 2021 Mobile traffic, (monthly PetaBytes) 4,500 4,000 3,500 Mobile PCs, tablets and mobile routers Smartphones Mobile traffic, (monthly PetaBytes) 5,000 Voice Data 4,000 3,000 2,500 2,000 1,500 1, Total smartphone traffic to grow seventeen-fold by 2021 in 3,000 2,000 1, ERICSSON MOBILITY REPORT INDIA JUNE 2016

7 Network Performance User experience and network performance at different locations In, network performance increases consumer loyalty, and this drives consumers towards choosing a particular mobile operator. Though customer support and marketing communication are also attributes valued by consumers in their operators, network performance ensures long-term consumer loyalty. 8 Mobile broadband users access services from different locations and their satisfaction levels vary from place to place, depending on the network performance. The overall satisfaction levels of smartphone users while performing internet activities is higher at home, followed by at work and while commuting. Over 70 percent of smartphone users are satisfied with the network performance at home while doing instant messaging, web browsing or social networking using mobile internet. Over 60 percent of smartphone users are satisfied with the network performance at home while streaming videos using mobile internet. However, only 50 percent are satisfied with network performance for streaming videos on a smartphone while commuting. User experience is expected to improve across all locations, with growing WCDMA/HSPA population coverage and LTE services being rolled out in. WCDMA/HSPA technology covered over 55 percent of the n population at the end of 2015 and is projected to increase to 90 percent by the end of The population coverage of LTE networks in is expected to reach 45 percent by the end of 2021, from around 15 percent at the end of Network performance satisfaction levels across various locations when accessed on a daily basis (percent) Instant messaging Web browsing/ social networking Streaming/ watching video User experience is expected to improve with growing WCDMA/HSPA population coverage and LTE services being rolled out in 0 At home When at work/ school/college Source: Ericsson ConsumerLab Analytical Platform (2015), Base: Mobile internet smartphone users of the respective activities, years old While commuting or traveling Population coverage, GSM/EDGE WCDMA/HSPA ~55% ~95% >95% ~90% LTE ~15% ~45% 8 Ericsson ConsumerLab Analytical Platform (2015), INDIA JUNE 2016 ERICSSON MOBILITY REPORT 7

8 Ericsson is the driving force behind the Networked Society a world leader in communications technology and services. Our long-term relationships with every major telecom operator in the world allow people, business and society to fulfill their potential and create a more sustainable future. Our services, software and infrastructure especially in mobility, broadband and the cloud are enabling the telecom industry and other sectors to do better business, increase efficiency, improve the user experience and capture new opportunities. With approximately 115,000 professionals and customers in 180 countries, we combine global scale with technology and services leadership. We support networks that connect more than 2.5 billion subscribers. Forty percent of the world s mobile traffic is carried over Ericsson networks. And our investments in research and development ensure that our solutions and our customers stay in front. Ericsson SE Stockholm, Sweden Telephone EAB-16: Uen Ericsson AB 2016

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