India's cellular revenue to skyrocket, study says

India's cellular services revenue will reach US$24 billion by the end of 2009, recording a compound annual growth rate (CAGR) of 35.6 percent, according to figures released Wednesday by Gartner Inc.

The research firm also said that India's cellular services market recorded the highest growth across the Asia Pacific and Japan region in 2004, to reach nearly $5 billion. The figures were announced at the Gartner Summit India 2005 conference in Mumbai.

The Indian cellular market will account for 11 percent of the overall Asia Pacific and Japan market by 2009, according to Gartner, in Stamford, Connecticut. The entire Asia Pacific and Japan market will generate $225 billion revenue in 2009, a CAGR of 6.2 percent increase from 2004, it said.

Declining service costs and the introduction of low-cost handsets mean more customers in India will have access to cellular services, according to Gartner. By 2009, India has the potential to increase its cellular penetration level to 30 percent, with more than 300 million connections, it predicted.

In the coming years, service providers will have to invest in semiurban and rural markets to increase market share and create sustainable businesses in the Indian cellular market, said Kobita Desai, Gartner's principal analyst for Asia Pacific for telecommunications.

However, a large proportion of the opportunity in India will comprise low income users, resulting in low average revenue per unit (ARPU), Gartner said. As a result, while the market opportunity and overall penetration will increase, service providers will have thinner margins. Operators should prepare themselves to work with ARPU levels that may be as low as $5 per month in the next 18 to 24 months, the research company said.

Value-added services such as ring tones, call-back tones, games and music downloads will play a significant role in differentiating services, and will be important to help cushion the pressure on overall service revenue, Gartner said.

IDG News Service

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