(3 July 2008 3:30 pm)

BANGALORE: Total cellular services revenue in India is projected to grow at a CAGR of 18 per cent from 2008-2012 to exceed $37 billion, according to Gartner.

The India mobile subscriber base is set to exceed 737 million connections by 2012 growing at a CAGR of 21 per cent in the same period. This growth is poised to continue through the forecast period, and India is expected to remain the world's second largest wireless market after China in terms of mobile connections.

Cellular market penetration is projected to increase from 19.8 per cent in 2007 to 60.7 per cent in 2012.

Gartner analysts said this growth could be primarily attributed to the increasing focus on the rural market, local consumer durable and electronic companies entering the domestic mobile handset segment, and lower handset prices. Vendors will continue to focus on sub-25$ handsets to capture market share.

Said Gartner senior research analyst Madhusudan Gupta, "Rural telephony will continue to trigger growth and is expected to grow fourfold during the forecast period. Call rates have further dropped to about 1.5 cents per minute narrowing the gap with fixed-line rates. These factors along with an increasing competitive landscape will fuel market growth and encourage the adoption of wireless services in the rural and semi urban provinces of India."

The total services revenue for prepaid connections is expected to grow at 18.9 per cent CAGR for the period 2008 - 2012 and the total services revenue for postpaid connections is expected to grow at 15 per cent CAGR during the same forecast period. By 2012, the prepaid subscriber base will cross 683 million and postpaid subscriber base will exceed 53 million subscribers. The churn rate in India is 41 per cent (2008), and despite a maturing market the ratio is expected to go up to 49 per cent in 2012.

According to Gartner, the industry will witness several changes in the coming year that could revolutionise the face of the telecom industry with the introduction of new technologies such as WiMAX, 3G and Mobile Number Portability (MNP). India will move to its next phase of evolution with the commercial launch of WiMAX by the first quarter of 2009 and 3G by the second quarter of 2009. With the introduction of MNP in 2008, churn rates are not expected to rise significantly, as India continues to be a prepaid dominated market.