India Mobile Services Market to Reach USD 30 Billion in 2016

India’s Mobile Connections To Exceed 900 Million To Achieve 72 Percent Penetration By 2016In a report by Gartner,  The India mobile subscriber base is forecast to reach 696 million connections in 2012, up 9 percent from 638 million in 2011. Total mobile services revenue in India is projected to reach US$30 billion in constant US dollars in 2016. The average revenue per user (ARPU) began to stabilize in 2011 – a notable change from the double-digit decline of ARPU between 2008-2010.

“The staggering growth of mobile connections has been driven by the expansion of mobile services in semi-urban and rural markets and the availability of cheap mobile devices,” said Shalini Verma, principal analyst, Consumer Technology and Markets, at Gartner. “However, the other performance indicators of the Indian mobile market seem modest in comparison to those of markets such as China.”

At US$40, the ARPU (avg. revenue per user) in India is among the lowest in the world and about one-third of that of China. India also lags behind China in mobile service penetration. The mobile service penetration in India is currently at 51 percent and is expected to grow to 72 percent by 2016, whereas China already achieved 71 percent mobile penetration in 2011 and is forecast to grow to 119 percent in 2016.”

Mobile data revenue has tremendous growth opportunities in India because of low Internet penetration. While fixed broadband is becoming a norm in several countries, India is lagging behind even emerging markets in fixed broadband penetration. India’s fixed broadband household penetration was 6 percent in 2011, which is lower than the overall penetration in emerging markets (estimated at 16 percent in 2011).

While Indian mobile operators have demonstrated “out of the box” thinking in IT and telecom infrastructure management to check operational costs, they have their work cut out to improve margins, by converting prepaid subscribers into postpaid.

With consumers perceiving mobile broadband as a basic necessity, mobile operators globally are reaping their investments in infrastructure through an increase in mobile data revenue. However, in India mobile operators have significant challenges, given the pragmatic nature of the emerging middle class with regards to their IT products and services spending. India could become the testing ground for innovative delivery and pricing models that could be replicated in other emerging markets. Mobile operators will need to focus on sound fundamentals such as improving the quality of service of mobile broadband.

“The industry is pegging its hope on market consolidation, which appears imminent in the aftermath of 2G license cancellations. Department of Telecom and Telecom Regulatory Authority of India have a pivotal role to play in removing uncertainties in policy-making, and license and spectrum management, so that the mobile operators can focus their energies on driving growth,” said Ms. Verma.

More information at Garter.