Vast telecom user base, scalable infra position India as strategic hub for AI-enabled innovations: KPMG

India's telecom sector is entering a new era as the world embraces AI in its fullest form, and with 1.2 billion telecom subscribers and 85% active internet connections, India is at a perfect spot to become a strategic hub for AI-led innovation in this sector and beyond, according to KPMG. The report, 'From Automation to Autonomy', says India’s telecommunication sector has undergone a transformative evolution over the past decade, establishing a robust digital infrastructure that now serves as fertile ground for advanced technologies such as agentic AI.

Notably, with over 1.20 billion subscribers as of March 2025, India is the world’s second-largest telecom market. "This near-ubiquitous connectivity means any new digital service can reach massive scale in India’s market."

India's mobile penetration (tele-density) in March 2025 stood at 85%, including 130% in urban areas and 59% in rural areas. "Equally important is India’s digital maturity, as evidenced by its booming internet usage. Such high consumption levels underscore a digitally savvy user base primed for rich, AI-driven services."

In terms of scale and usage, the KPMG report says India has seen significant growth in terms of wireless data traffic, internet subscribers, and average data consumption. Notably, India's total wireless data traffic has increased at 17.5% YoY to 228,779 petabytes, with subscribers consuming 20+ GB data per month. The total internet subscribers stands at 909 million, of which 944 million are broadband users (4G/5G). The average data consumption per user stood at 620 MB/month in 2014, which has increased manifold to 32GB/month in 2025.

"This growth has been accompanied by the improving financial health of the telecom sector. After years of extremely low tariffs, operators have raised prices modestly, lifting the average revenue per user (ARPU) to about INR 174.46 per month in 2024–25 (up ~17 per cent from the previous year). Industry wireless data revenues grew 15.5 per cent annually to reach INR 2.15 trillion in FY2024–25," says the report.

The report highlights that while subscriber growth is nearing saturation, usage and revenues are on an upswing, signalling a sign of a maturing digital ecosystem. "Nearly 85 per cent of Indian telecom subscriptions are now active internet connections, and consumers are increasingly embracing digital apps, content streaming, and mobile-first services."

It says the readiness of the user base, combined with scalable infrastructure and favourable market dynamics, positions India as a strategic launchpad for AI-enabled innovations in customer experience, network optimisation, and intelligent automation. "Beyond customer service, telcos are leveraging AI agents for marketing and revenue optimisation. AI systems analyse customer data to personalise offers and predict churn. Some operators are using AI-driven targeted promotions and have seen noticeable increases in conversion rates and ARPU. For example, AI can proactively identify a customer likely to exceed their data plan and automatically offer an upgrade or add-on, effectively acting as an autonomous “sales agent.”

In terms of AI adoption trends globally, the rise of agentic AI comes on the heels of an extraordinary surge in AI adoption across industries, including telecom. As of Q2 2025, one-third of large organisations (33%) have deployed AI agents in production, a three-fold jump from 11% just a few quarters prior, the report shows. KPMG also cites an industry study to state that 97% of telecom companies are now either adopting or actively assessing AI in their operations. Nearly half, 49%, are already using AI in day-to-day operations, up from 41% the year before, indicating a rapid maturation of use cases.