Cellular revenues to boom in next 5 yrs in India

Bangalore, July 18: Research firm Gartner Inc., today announced that Indian cellular services revenues would boost to US dollars 25.617 billion by 2011 growing at a compound annual growth rate of 18.4 per cent from this year.

The cellular business in India was US dollar 8.95 billion in 2006. The growth was almost expected to double over the next five years from 9.6 per cent in 2006.

Gartner said in a release here that India would continue to be the fastest growing country in the Asia Pacific region in terms of mobile telephony after China and promises to become more dynamic with the entry of Vodafone.

Senior Research Analyst Madhusudan Gupta said in the release ''with more marginal users forming the bulk of the addressable market, low service costs and inexpensive handsets will help to unlock the inertia and facilitate adoption of mobile services. Call rates have reduced significantly to about 2.6 cents per minute.

However, this remains high compared with fixed-line rates at 0.9 cents per minute. Gartner expects prices to drop in order to become more competitive with fixed-line rates, further lowering the barrier to entry. This trend, coupled with the emerging-market handset initiative by vendors and operators, will boost adoption of mobile services in India's semi urban and rural provinces''.

Gartner said mobile penetration in the rural market was low at two percent, but this represented an immense opportunity for the cellular service providers. Handset manufacturers are therefore concentrating on launching sub US dollar 25 mobile handsets.

Businesses are expanding into India's smaller towns and cities where fixed-line connectivity is limited and often nonexistent.

Enterprises would use mobile services for intra-company, as well as inter-company, communications. Gartner expects enterprise service plans offered by mobile services players to become distance independent. This would be a big incentive for companies to use mobile phones, not only because call rates are comparable to fixed-line rates, but also because of the benefit that mobility gives their employees, especially while travelling or in remote locations.

With these factors, cellular market penetration is projected to increase from 12.7 percent in 2006 to 38.6 percent in 2011. This overall penetration would primarily be driven by an increased focus on the rural market, aggressive promotions by the players and handset bundle offers. By 2011, Gartner expects 58 percent of the rural population and 95 percent of the urban population to be covered with mobile connections.

UNI