Offering fourth generation (4G) mobile services in India: a techno-economic assessment from the operators’ perspective

Abstract

This paper aims at determining the techno-commercial feasibility of a 4G (LTE) network deployment in India to provide high-speed broadband access to mobile subscribers. High-speed broadband connectivity is one of the important priorities of the ‘Digital India’ initiative of the Government of India. This assessment is done using Discounted Cash Flow (DCF) approach. We have taken into account, the radiotechnical parameters of the LTE network components, the expected subscriber populations forecast using the Bass-Model, and the coverage area matched to the service capacity using a cell dimensioning approach. We have estimated the cost of infrastructure deployment that would meet the demand, likely revenue generated from the users, and break-even period for a given average revenue per user (ARPU). With the help of three different assumed data demand scenarios, the interplay between the forecasted adoption rate and the minimum ARPU required for attaining the breakeven is explored. To understand the profitability and the present value of investments for different demand scenarios, a modified internal rate of return (MIRR), and net present value (NPV) analyses are performed.The results of the study indicate that,for a right mix of data-volume offerings in a product package, the annual ARPU can even be both affordable to the rural population, as well as profitable for the operator. With some amount of stimulus and demand inducing initiatives from the government, investments in the rural areas can be an attractive option for 4G operators too.