India’s wireless market January 17, 2007
Posted by chetan in : General , trackbackGiven the recent worldwide frenzy to get a piece of action of the Indian wireless market, it is no surprise that the heavyweights are finally taking notice of the opportunity. India added over 72M subs in 06. In our report back in May 2006, we reached two conclusions (amongst many)
We noted in our research that by end of 06, India will easily start surpassing China in net-adds (we were probably the first analyst to call that out). During the last four-five months, India has whizzed past China in net-adds. Though India’s 150 odd subs is no comparison for the massive half a billion subs in China, it is the growth opportunity that attracts investment. Another conclusion was that India will surpass US as the second biggest wireless market by 2008 (again, probably one of the first analyst to call that out explicitly). India is well on its way to make this happen next year. Though the opportunity is tremendous, there are significant challenges and risks in the market as well. The market is clearly not for the faint-hearted. Unless you are well prepared, you will chewed and thrown out of the market in no time. Even the giants realize that and have done better home work this time around (In the early days, Vodafone, and others rushed to the market and tried to change the market but retreated in haste due significant failures that had more do with management than anything else).
How India tackles and promotes rural infrastructure and service expansion will define its growth over the next two years. Communications Minister Maran has done good to the industry. Let’s see if govt can play an active part in the tremendous opportunity in opening the markets further.
We will be closely watching (and reporting).
Comments»
Do you have any thoughts on the monetization of all these subscribers? ARPUs are so low in India that I am sure just getting more subscribers wouldn’t be the endgame of service providers. Are there trends indicating that ARPUs are increasing - atleast in the more lucrative circles like Mumbai/Delhi.
India probably has better rural infrastructure than China. It has also solved the problem of low income earner with pre-paid offering and informal load sharing agreements. However, the next major gap will probably be the literacy gap. How can one possibility use SMS (very popular) if one can’t read?
Smruti,
ARPU continues to drop slowly, however data ARPU is increasing but not so much that it will offset the decline in overall ARPU. Carriers clearly need a strategy to make “more” money on data.
hip2b2,
you are right, people have been testing some interesting apps based on voice and pictures (MMS) but it gets tricky for voice due to several dialects but it still can be done if enough effort is poured into consumer education.
thanks for writing in.
Its a strange dichotomy for the Telcos. here in India. On one hand the ARPU’s are falling and have to fall lower if they want to get the BoP market. And the current crop of VAS services are (ringtones, CRBT’s etc.) are selling so well that they are happy with just focusing on increasing their subscriber base. I guess once the growth rate reaches a plateau they’ll start looking more aggressively at VAS services.