The Hindu Business Line : Cellular revenues to cross Rs 1 lakh cr by 2011: Survey

New Delhi, July 18 Cellular services revenues in the country touched Rs 36,131 crore($8.95 billion) in 2006 and was projected to grow at a compound annual growth rate (CAGR) of 18.4 per cent from 2007 to 2011 to reach Rs 1,03,415 crore ( $25.617 billion), Gartner Inc said on Wednesday. The research firm pointed out that data revenues will outpace growth of voice revenues and contribute 22 per cent of revenue in 2011 from 9.6 per cent in 2006.

Mr Madhusudan Gupta, senior research analyst, Gartner said: “With more marginal users forming the bulk of the addressable market, low service costs and inexpensive handsets will help to unlock the inertia and facilitate adoption of mobile services. Call rates have reduced significantly to about 2.6 cents per minute. However, this remains high compared with fixed-line rates at 0.9 cents per minute. Gartner expects prices to drop in order to become more competitive with fixed-line rates, further lowering the barrier to entry. This trend, coupled with the emerging-market handset initiative by vendors and operators, will boost adoption of mobile services in India’s semi-urban and rural provinces.”

This overall penetration will primarily be driven by an increased focus on the rural market, aggressive promotions by the players and handset bundle offers. By 2011, Gartner expects 58 per cent of the rural population and 95 per cent of the urban population to be covered with mobile connections. The market is driven by pre-paid connections, which accounted for more than 84per cent in 2006 and is expected to grow to more than 93 per cent of the connection base by 2011.

However, operators will facechallenges in finding the right balance between yield and market share. “Customers with low disposable incomes will form a significant proportion of the base. As a result, ARPUs (Average Revenue Per User) per year will continue to decline through the forecast period. In 2006, the average ARPUs per year of players was $82.1, which will further reduce to $59.5 by 2011,” Gartner said.

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