A supposedly sure way of driving data penetration in India is to bring down data pricing and stimulate increased consumption (both from existing subs and newer subs) that more than offsets the decline in unit pricing delivering more than base-case revenue growth, essentially reckoning on the significant elasticity of data (unlike voice).
Experience in other markets such as China, Indonesia and Philippines suggests that data is powerfully elastic, and more importantly, this elasticity has endured for a good length of time (3+ years) for most players in these markets. However, data in India may not be nearly as elastic as has been in China, Indonesia and Philippines for reasons as stated below,
1) India appears to be a far more localized, heterogeneous wireless data market. Just data pricing drop alone cannot stimulate data consumption unless data itself is available across formats. Content needs to be increasingly available in multi-lingual and local formats in India. Sometimes, it?s not just about translating existing content in already available languages (say English/Hindi) into newer language formats but also about developing new localized content.
2) IDC has significantly downgraded its CY16 smartphone volume estimate for India to 112-115 units (from the first estimate of 130-135 million units estimated going into CY16) ? now implying an 8-12% growth for CY16 vs 25-30% initial growth estimate. This dramatic slowdown is seen despite the significant push of RJio branded 4G smartphones ?LYF? into the market which alone accounts for 7% of 1H16 volumes, emerging as the top 5 smartphone OEMs in 1H16, excluding LYF, the India smartphone market may have well seen a YoY decline in 1H16.
