India to have 12% worldwide mobile connections but just 2% revenue

by Sharon Lobo    Apr 22, 2013

Indian Telco

Today, Indian telecom operators are faced with two major challenges – growing their profit margin in the face of intense competition and successfully competing with over the top service providers, such as Facebook and WhatsApp.

According to Gartner, India’s mobile services market will reach Rs.1.2 trillion in 2013, up 8 percent from 2012 revenue of Rs. 1.1 trillion, while mobile connections will grow to 770 million in 2013, an 11 percent increase from 712 million connections in 2012. Though these numbers appear huge there is little to cheer about it as Shalini Verma, principal research analyst at Gartner puts it, “The mobile market in India will continue to face challenges if average revenue per unit (ARPU) does not grow significantly. If the prevailing conditions do not change in the Indian telecom market, India will account for 12 percent worldwide mobile connections, but just 2 percent of worldwide mobile services revenue (in constant USD) in 2013.”

While India continues to play catch up with the rest of the world in terms of mobile broadband adoption, there seems no end to the regulatory hurdles it continues to face. Recently, the apex court had ordered telcos to stop offering 3G services to their subscribers in circles where they do not hold the requisite spectrum, by having intra-circle arrangements with other telcos.

India has a phenomenal pent up demand for mobile broadband and local mobile apps that solve everyday problems for consumers.
-Shalini Verma, Principal Research Analyst, Gartner

“As mobile voice services continue to get commoditized in the country with the increased use of voice over IP (VoIP) and the probable termination of national roaming charges, mobile broadband is the area of opportunity for operators,”said Shalini. However, with RIL launching 4G services, which is expected to be at a very competitive rate, incumbent telcos will find it tough to make any significant in-roads in the mobile broadband space.

It will be imperative for telcos to think of growing the top line through innovative services. With social and video apps doing extremely well, it is time to look beyond these and deliver apps that can have a sustained business model. Telcos should ideally look at offering smaller mobile broadband plans using a sachet-style usage pattern which appeal to Indian consumers.

Tags: Telcos, RIL, 3G, 4G, Gartner