Indian mobile services to rise 8 percent in 2013 to $22B

Despite growth forecast, telcos face major challenges intense domestic competition and threat from OTT players. Rural expansion may be their best strategy, according to Gartner study.
Written by Nitin Puri, Contributor on

India's mobile services market is set increase 8 percent in 2013 to reach 1.2 trillion rupees (US$22 billion), according to research firm Gartner on Monday.


While these numbers are large, in comparison to global numbers, Gartner pointed out India only accounted for 2 percent of global mobile services revenue, even though India makes up around 12 percent of global mobile phone users. Furthermore, active mobile connections are expected to grow from 712 million in 2012 to 770 million in 2013, an increase of 11 percent.

The two major challenges facing Indian mobile phone operators are growing their profit margins amongst intense competition domestically, and also, successfully competing with over-the-top service (OTT) providers such as Facebook and WhatsApp. Furthermore, with the expected free India roaming in place by October 2013, this will create another challenge which is yet to be addressed.

In addition, rural expansion will come at a cost to Indian telecom operators and this will most likely be passed onto consumers in either hikes of activation fees or tariffs. Still, with a population of over 1.2 billion people and assuming there is one mobile connection per person, although that is not always the case, more than half of India is already mobility connected.

Indian consumers are also demanding more broadband services, as both audio and video streaming are in high demand, especially in the metros such as New Delhi and Mumbai. However, it's interesting that even right now, neither metro has active 4G LTE network. Only one Indian telecom operator, Bharti Airtel, has an existing 4G LTE network in Kolkata, Bengaluru, Pune and now Chandigarh.

The target area for Indian telecom operators is now mobile broadband across India itself. However, this will take time to fully implement, along with the competition from existing Internet service providers (ISPs) already offering mobile Internet dongles with India-wide roaming.

To complicate matters, there is still the ongoing battle between various Indian mobile operators and the Indian government in terms of auctioning and licensing of 2G spectrum across India in the different circles and zones. This itself will take time to sort out, but in the meantime, consumers can't wait. Clearly, they want services at par as with the other Western developed nations. Unfortunately, they are at the mercy of both parties involved in this tug of war and will have to patiently wait.

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