Indian mobile phone industry to triple by '11

ell phone subscribers in the country are expected to triple during the next few years, making it one of the world's fastest growing markets.

Last year, the number of subscribers nearly doubled to 14.95 crore, up from 8.5 crore in 2005, according to iSuppli Corp. About 5.5 million Indians are signing up each month, which should drive subscriber numbers to 48.4 crore by 2011.

"A rise in per-capita income, the arrival of less-expensive phones, declines in tariffs, pro-industry and pro-consumer regulations enacted by the government and a host of other factors have been instrumental in driving this growth," said Jagdish Rebello, director and principal analyst for iSuppli.

iSuppli noted that the way subscribers are counted has changed, which may be artificially boosting the numbers a bit. Since March 2006, the Indian government has included fixed Wireless Local Loop subscribers in the overall mobile subscribers statistics. It was not immediately known how much this pads the numbers.

Still, iSuppli noted that urban tele-density exceeded 40 per cent, while rural penetration stagnated at a little more than 2 per cent. Approximately two-thirds of the Indian population lives in the countryside.

iSuppli estimates that 6.93 crore new legal handsets were sold in India in 2006, making India the second largest market behind China. Like China, India is dominated by GSM handsets: 5.17 crore.

This trend is likely to continue. The major CDMA carrier in India, Reliance Communications, has made a "strategic decision" to put a cap on its CDMA subscriber base and shift to a GSM network, iSuppli said.

Entry-level handsets will continue to drive volumes in the market; however, medium-level and smartphones will outpace industry growth, the researcher said. Because most phones in India are simple, voice-centric devices, it also expects longer replacement cycles. Yet as feature phones gain in popularity, the replacement rate should grow to 25 per cent by 2011.

ARPU in India was about Rs.308.84 ($7) in 2006. That will drop to less than Rs.220.60 ($5) by 2010, as rural penetration increases. Data services via GPRS and EDGE will slowly increase, but are not expected to be a major contributor to ARPU in the short term.