Will 3G rescue mobile telcos in India?

Mobile companies in India are scratching their heads to figure out how to increase their ARPUs [average revenue per user].  The potential of increase revenues in urban India is saturating, which is the worrying point for all telcos.

According to an article on afaqs,

  • India will have 1.2 billion mobile users in India by 2014. By then we will not be a growing, but a mature market.
  • In Delhi, every person has two mobile connections on an average.
  • In the hill state of Himachal Pradesh, everyone in an urban area has four mobile numbers on an average (seriously, they need HELP! Four mobiles??).
  • TRAI says the wireless teledensity (number of connections for every 100 people) in urban India’s 21 circles is 150 per cent.
  • The story is different in rural India, where mobile teledensity is 32.75 per cent, pulling down the overall figure to 67.98 per cent (by the end of March 2011).
  • The average revenue per user is falling. Even the minutes of usage are coming down. The margins are under pressure.
  • The mobile penetration is very high. The number of mobile additions has started to fall. The additions fell about 40 per cent between February and June 2011 from 14.7 million to 8.6 million
  • There is no incentive for operators to add subscribers, as it is unlikely that spectrum allotment will be linked with the subscriber base in the future
  • Telcos are banking on 3G services to drive usage and revenues.

I have used 3G with two operators. Was not particularly impressed. Also friends tell me if the 3G coverage is not good the voice calls keep dropping, so manually you need to switch over to 2G for experiencing uninterrupted voice calls (what a pain!).

I have always said 3G will do well in India if the pricing is good. Currently a 2GB transfer will cost about $25 per month. Not sure how many Indians are ready to shelve that kind of money when the 3G coverage is still not available pan India.

Comments

  1. Yes Mahesh,

    I totally agree with you that the telecom sector is now matured and the profits are really tight after so many companies jumping into this business.

    These days a customer is looking at value for money before even thinking of taking 3G connection. Yes the speed at the moment is really very bad for 3G customers and not sure what companies are going to do to improve it over the period of time.

    If increase in 3G price then i am sure the users are really going to get disappointed.

    Cheers!!

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