India’s mobile services market is continuing its growth momentum. According to Gartner, it will increase by 8 percent to hit US$2.2b this year. Mobile connections will grow 11 percent to 770 million in 2013.
“The mobile market in India will continue to face challenges if average revenue per unit (ARPU) does not grow significantly,” said Shalini Verma, Principal Research Analyst at Gartner. “If the prevailing conditions do not change in the Indian telecom market, India will account for 12 percent worldwide mobile connections, but just 2 percent of worldwide mobile services revenue (in constant US$) in 2013.”
Indian telecom operators are faced with two major challenges – growing their profit margin in the face of intense competition and successfully competing with over the top service providers, such as Facebook and WhatsApp.
“As mobile voice services continue to get commoditised in the country with the increased use of voice over IP (VoIP) and the probable termination of national roaming charges, mobile broadband is the area of opportunity for operators,” said Verma. “India has a phenomenal pent up demand for mobile broadband and local mobile apps that solve everyday problems for consumers. Smaller mobile broadband plans using a sachet-style usage pattern appeal to Indian consumers.”
As India plays catch up with the rest of the world in terms of mobile broadband adoption, telecom operators need to think of growing the top line through innovative services. Further rural expansion of mobile services will come at a cost. In India, innovation in utility apps that help bring efficiency in a consumer’s life will bring in sustained revenue and will be relatively more difficult to replicate by new entrants.
While social and video apps are doing extremely well in India, Verma said it is time to look beyond these and deliver apps that can have a sustained business model. Operators need to insert themselves into the value chain of these new apps and services.