Indian Cellular Services to Touch USD 37 Billion
By CXOtoday Staff
Mumbai, Jul 2, 2008

Total cellular services revenue in India is projected to grow at a CAGR of 18 % from 2008-2012 to exceed US $37 billion, according to Gartner. The India mobile subscriber base is set to exceed 737 million connections by 2012, growing at a CAGR of 21 % in the same period. This growth is poised to continue through the forecast period, with India expected to remain the world's second largest wireless market after China in terms of mobile connections.

"The growth in the mobile subscriber base is on the back of a rapidly proliferating rural market, lower handset costs, and low tariff rates in the Indian market," said Madhusudan Gupta, senior research analyst at Gartner, "Rural telephony will continue to trigger growth and is expected to grow fourfold during the forecast period."

Cellular market penetration is projected to increase from 19.8 % in 2007 to 60.7 % in 2012. Gartner analysts said this growth could be primarily attributed to the increasing focus on the rural market, local consumer durable and electronic companies entering the domestic mobile handset segment, and lower handset prices.

The Indian mobile connection market continues to be dominated by prepaid subscribers. Prepaid connections accounted for more than 89 % of all mobile connections in 2007 and are expected to grow to more than 92 % of the connection base by 2012. The total services revenue for prepaid connections is expected to grow at 18.9 % CAGR for the period 2008 - 2012 and the total services revenue for postpaid connections is expected to grow at 15 % CAGR during the same forecast period. By 2012, the prepaid subscriber base will cross 683 million and postpaid subscriber base will exceed 53 million subscribers.

The churn rate in India is 41 % (2008), and despite a maturing market the ratio is expected to go up to 49 % in 2012.

The revenues from data services will significantly contribute to the growth of overall cellular services revenue in India, with a CAGR of 26.3 % in the forecast period.
Prepaid subscribers are expected to adopt data services faster than the post-paid segment. Data revenues for the prepaid segment are projected to grow at 29 % CAGR during the forecast period as compared to 22 % CAGR for the post paid subscribers during the same period.

The bulk of the revenues will continue to come from voice revenues. However, with the increased growth in data services, the percentage of revenues coming from voice will reduce from 89 % in 2007 to 85 % in 2012.

According to Gartner, the industry will witness several changes in the coming year that could revolutionize the face of the telecom industry with the introduction of new technologies such as WiMAX, 3G and Mobile Number Portability (MNP). India will move to its next phase of evolution with the commercial launch of WiMAX by Q1'09 and 3G by 2Q09. With the introduction of MNP in 2008, churn rates are not expected to rise significantly, as India continues to be a prepaid dominated market.



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