The nation is already well and truly routed, and telcos have new taxes to pay
India’s networking equipment market collapsed before the Coronavirus could stab it in the back, thanks in part to a new tax on telcos.
New IDC data released yesterday said the sale of routers, switches and wireless LAN kit in the world’s most populous nation fell by 22.5 percent year over year in 2019’s final quarter.
The analyst firm pegged the plunge on two things: a previous surge in investment, and a new tax on telcos.
The telco tax was the result of a long dispute that started in the early 2000s when India changed its licensing regime for carriers. Eventually it changed to charging eight percent of average gross revenue, in a tax known as AGR dues. The first lot of those dues, about US$1.5bn worth across the industry, came due in February. Cash-poor carriers therefore kept their hands in their pockets rather than rushing to buy routers.
They’d bought them already, anyway: IDC spotted a surge in Q4 2018.
India’s market is sizable: even in this down quarter the nation consumed $142.6m of switches, $75.8m of routers and a $56.7m wodge of WiFi, for a quarterly total of $275m. Cisco dominated the switch and router segments, with 49.9 percent and 54.3 percent market share. HPE topped the WLAN market with 19.2 percent, but the “Others” category led at 30.1 percent.
IDC’s predicted that Coronavirus will “soften buying behaviour” during Q1 2020 but maintains its view that single-digit compound annual growth can be expected through to the year 2023. And that’s after 5G spurs the need for new kit. ®