India's cellular market to expand to $25 bn by 2011

Thursday, 19 July 2007, 07:00 Hrs
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New Delhi: The Indian cellular services revenues would exceed $25 billion within the next four years, growing at a rate of 22 percent from the current 9.6 percent, according to a study by Gartner Inc. released Wednesday.

It also said that the Indian telecom industry would become more dynamic with the entry of global telecom giant Vodafone in the Asia-Pacific region.

"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," Madhusudan Gupta, senior research analyst, Gartner, said in a statement.

"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," he added.

Gartner also highlighted the huge untapped potential in the rural areas where the penetration rate was as low as two percent.

It said the cellular market penetration is projected to increase from 12.7 percent in 2006 to 38.6 percent in 2011. By 2011, Gartner said 58 percent of the rural population and 95 percent of the urban population will be covered with mobile connections.

India adds over 7 million mobile phone users a month.

"The Indian market is driven by prepaid connections, which accounted for more than 84 percent in 2006 and is expected to grow to more than 93 percent of the connection base by 2011," Gartner said.

Highlighting the problem of spectrum crunch, Gartner said this could have an impact on expansion plans and the quality of service of the telecom operators because of inadequate investment in or upgrading of the networks.

"With the intensifying competition, the release of 3G spectrum will help in bridging the gap generated because of lower voice tariffs and handset subsidies. The release of 3G will be essential to sustain the growth in the cellular services market," Gupta said.
Source: IANS
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