Date:01/09/2005 URL: http://www.thehindubusinessline.com/2005/09/01/stories/2005090101970400.htm

Back Revenues of Indian mobile services to reach $24 b by 2009: Gartner

Our Bureau

Overall penetration and market opportunity will increase, but with thinner margins.

New Delhi , Aug. 31

RESEARCH group Gartner on Wednesday said that the revenues of the Indian cellular services market would reach $24 billion by 2009, recording a compounded annual growth rate (CAGR) of 35.6 per cent.

Gartner said that the Indian cellular services market had recorded the highest growth across the Asia Pacific and Japan region in 2004 with a CAGR of 67 per cent.

It has predicted that the Asia Pacific and Japan cellular services market will reach $225 billion in 2009, representing a CAGR of 6.2 per cent.

The Indian cellular market will account for 11 per cent of the overall Asia Pacific and Japan market by 2009.

"The cellular industry is a mass market phenomenon that relies on economies of scale. Time to market advantage is critical and favours those who follow aggressive network expansion. In the forthcoming years, the capability and capacity to invest in penetrating semi-urban and rural markets will be important determinants for increasing market share and creating sustainable businesses in the Indian cellular marketplace," said Ms Kobita Desai, Principal Analyst, Asia-Pacific for Telecoms, at Gartner.

"With declining service costs and the introduction of low-cost handsets, the barriers to entry for cellular services will come down substantially, creating a significant market opportunity. Gartner estimates that by 2009, the Indian market has the potential to increase cellular penetration levels to 30 per cent, netting more than 300 million connections," a press release said.

A large proportion of the market opportunity in India will comprise low-income users, resulting in low average revenue per unit (ARPU). Overall penetration and market opportunity will increase, but with thinner margins.

"Operators should prepare themselves to work in business environments where ARPU levels are expected to be as low as $5 per month in the next 18-24 months. Operators will struggle to find a balance between yield and growth to fulfil growth expectations. Value-added services such as ring tones, call-back tones, games and music downloads will play a significant role as a service differentiator and as an important revenue stream that will help to cushion the pressure on overall service revenues," Gartner said.

Mobile data accounted for seven per cent of service revenue in 2004 and it is expected to rise to 20 per cent by 2009.