Electronics Production | April 12, 2007
Indian Mobile-Phone subscribers to<br>more than triple from 2006 to 2011
India in 2006 emerged as one of the world's fastest-growing wireless telecom markets, with the number of mobile-phone service subscribers in the nation growing to 149.5 million, up from 85 million in 2005.
And the number of new subscriber additions continues at a torrid pace. Monthly mobile subscriber additions averaged 5.5 million in 2006, and exceeded 6 million per month by the end of the year. iSuppli Corp. projects that the wireless service subscriber base in India will rise to 484 million by 2011, more than three times the 149.5 million in 2006. “A rise in per-capita income, the arrival of less-expensive phones, declines in tariffs, pro-industry and pro-consumer regulations enacted by the government and a host of other factors have been instrumental in driving this growth," said Dr. Jagdish Rebello, director and principal analyst for iSuppli. It must be noted that there has been one significant change in the way subscriber counting is conducted in India since March 2006: Per the Indian government's New Policy, fixed Wireless Local Loop (WLL) subscribers now are included as mobile subscribers. The penetration of wireless technologies remains high in urban areas compared to rural regions, where approximately two-thirds of the Indian population resides. As of December 2006, the urban tele-density had grown to more than 40 percent, compared to rural penetration of little more than 2 percent. The growth in wireless subscribers is fueling explosive growth in demand for new phones in India. iSuppli estimates that the number of total new legal handsets sold in India in 2006 was 69.3 million. As the subscriber base continues to expand, iSuppli projects that India will emerge as the second-largest market in the world after China for mobile handsets in terms of unit shipments. iSuppli estimates that in 2011, approximately 11 percent of the global mobile device unit shipments will be to India. The Indian mobile phone market in 2006 was dominated by GSM-enabled handsets with 51.7 million out of 68.9 million handsets being GSM enabled. iSuppli expects that GSM phones will continue to gain share of the handset shipments into India. A significant reason for this growth is that the major CDMA carrier in India, Reliance Communications, has made a strategic decision to put a cap on its CDMA subscriber base and shift to a GSM network. Entry-level handsets will continue to drive volumes in the market; however, medium-level and smart phones will outpace industry growth. The replacement cycle for mobile phones varies radically by the type of market. In India, handset usage is primarily a voice-centric affair. Therefore, the replacement cycle is longer. However, as handset features gain prominence, the replacement rate is expected to grow to 25 percent by 2011. The blended mobile-phone services Average Revenue Per User (ARPU) for the Indian market was estimated to be in the vicinity of $7 in 2006. As growth picks up in the semi-urban and rural areas, there will be downward pressure on ARPU. iSuppli estimates the ARPU will drop to less than the $5 level by 2010. Data services are slowly starting to gain traction in India. However, iSuppli estimates that data ARPU in India will be extremely low for the foreseeable future. This is because although GPRS and EDGE services have been available in India for quite some time, they have met with limited success. GPRS service first was launched in India in February 2002, while EDGE commenced in July 2004. GPRS is widely deployed in India, while EDGE has been rolled out only in major metropolitan areas and in a few other smaller cities. In the years to come, EDGE subscribers will grow, but will remain a limited portion of the total subscriber base, iSuppli believes.
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