Business - Mobile reach to triple in 4 years

Mobile reach to triple in 4 years: Gartner ( July '3,2008, Hindu Business Line)
India would have more than 737 million mobile connections by 2012 and revenues from cellular services will exceed $37 billion by then.In the next four years, cellular market penetration would increase to 60.7 per cent from 19.8 per cent last year, according to a study by research firm Gartner Inc.“The growth in the mobile subscriber base is on the back of a rapidly proliferating rural market, lower handset costs, and low tariff rates in the Indian market,” said Mr Madhusudan Gupta, Senior Research Analyst, Gartner. With 14 telecom service operators already present and another two set to join, the Indian telecom industry is expected to see some level of merger and acquisition activity in 2009. Given the high level of competition and anticipated consolidation, different business models will emerge that could push tariffs further down, with Indian mobile service consumers set to emerge as the biggest beneficiaries, said Mr Gupta.Vendors will continue to focus on handsets cheaper than $25 (Rs 1075) to capture market share, the report said. At the end of April, the number of mobile connections in India reached 264.19 million, depicting a three per cent month- on-month rise.The Indian mobile connection market continues to be dominated by pre-paid subscribers. Pre-paid connections accounted for more than 89 percent of all mobile connections in 2007 and are expected to grow to more than 92 percent of the connection base by 2012. The total services revenue for pre-paid connections is expected to grow at a compounded annual growth rate of 18.9 per cent till 2012.The pre-paid subscriber base will cross 683 million and post-paid s base will exceed 53 million subscribers. The churn rate or the rate at which customers switch to competing cellular firms in India is 41 per cent currently; despite a maturing market the ratio is expected to go up to 49 per-cent in 2012.Moreover, with the increased growth in data services, the percentage of revenues coming from voice will reduce from 89 per cent in 2007 to 85 per cent in 2012.With 14 telecom service operators already present and another two set to join, the Indian telecom industry is expected to see some level of merger and acquisition activity in 2009. Given the high level of competition and anticipated consolidation, different business models will emerge that could push tariffs further down, with Indian mobile service consumers set to emerge as the biggest beneficiaries, said Mr Gupta.