The contribution of data revenues from EDGE is unsurprisingly declining driven both by lackluster growth in EDGE data users and high growth in 3G/LTE user base. Idea, for example, actually saw a dip in EDGE data consumption for the first time in 3Q16. We expect this trend to sustain and likely accelerate on the back of both healthy growth in 3G revenues as well as commercial LTE launch by operators
(Bharti/Vodafone/Idea have already launched; Jio likely in 2QCY16). Both 3G and LTE will play an important role in industry data growth, in our view. This is due to the fact that:
Ecosystem of 3G is more developed vs LTE, i.e. cheaper equipment and handsets.
Incumbents have a larger spectrum portfolio for 3G compared to 4G.
Currently ~50% of the subscribers with 3G enabled handsets actually subscriber to 3G services. The gap is likely to narrow over time helping drive usage growth.
