What's Driving Sales Of 4G Handsets In India?

by CXOtoday News Desk    May 18, 2015

4g

Sales of 4G handsets in India are expected to spur this year with a number of telcos joining the 4G bandwagon. Market research firm GfK forecasts sales of 4G handsets will increase to 7 percent of total smartphone sales in India. However, analysts also point out that India’s 4G ecosystem is still at a nascent stage and it would take 2 to 3 years to ramp up.

India’s 4G drive

“Emerging Asia is forecast to be the fastest growing region, driven by India and Indonesia, where low smartphone penetration leaves plenty of room for growth,” Director of trends and forecasting at GfK, Kevin Walsh told PTI.

In India, Airtel, Reliance Jio Infocomm and Reliance Communications have the capability to start pan-India 4G service. Airtel has started providing 4G service in Kolkata, Mumbai, Chennai, Bengaluru, Pune, Chandigarh and Amritsar at 3G mobile Internet rates. Besides, Aircel, which holds 4G spectrum in eight out of 22 telecom circles, has also launched 4G in select area. Videocon Telecom has announced its plan to launch 4G services in UP and Bihar by December at rates at par with 2G and 3G internet services. 

Many devices makers are now lining up 4G-compatible phones (especially in the sub-Rs 10,000 category) as operators are gearing up to launch the high-speed Internet service in the country. Lenovo’s A6000 and A7000, Yu’s Yureka and Xiaomi Redmi Note 4G are some of the devices that hit the Indian market in the sub Rs 10,000 segment recently.Microsoft recently said it will line up more 4G-compatible devices in India once the infrastructure for the high speed Internet service is ready in the country.

Cybermedia Research points out that smartphone sales increased by 7 percent to nearly 310 million in the reported quarter from 290 million a year ago. The growth of smartphone sales in India is also expected to be helped by an expanding 4G network.

Challenges remain

Despite the momentum, a BusinessandMarket.net report notes that India’s 4G ecosystem is at a nascent stage and it would take 2 to 3 years to ramp up as there was still a lot of scope for 3G services in the country. Industry estimates the 3G subscriber base to surge to 400 million by 2020 from nearly 100 million today. 

“4G-LTE ecosystem is not mature at a mass scale while consumers in 4G-enabled regions are apparently not looking at it as a value-for-money proposition,” BusinessandMarket.net founder-analyst Deepak Kumar told ET. “3G is still has a long way to go as most of the incumbent operators are currently focusing on monetization of their 3G investments. he said. 

Mahesh Uppal, Director ComFirst said in an interview, “Relevant digital content, may be limited and both difficult and expensive to procure. “This is especially true for content in regional languages. Companies are struggling with business models that might offer sustainable revenues to justify the huge investment in networks, spectrum and content. The ecosystem for 4G rollout is manifestly weak.”

While a number of 4G-friendly phones coming to the market, the device ecosystem is yet to mature in India and availability of affordable and wider range of devices is still a challenge, believes Jaideep Ghosh, partner, KPMG Advisory Services .“The readiness of eco-system is important, so is customer readiness. Perhaps the larger mass has not yet felt the need for 4G in India. It will take some more time to kick-off in India. Pricing will be an important factor as far as getting the mass market is concerned,” he said.

In such a scenario, the government and telcos have a wide task ahead. They should encourage strategic partnership and create a strong ecosystem where 4G can grow and thrive, believe experts.