Ronnie05's Blog

Powering the next wave of revenue growth in Indian telecom

Posted in Industry updates by Manas Ganguly on May 5, 2013

As per latest stats from Gartner, India’s mobile services market is expected to grow eight per cent to Rs 1.2 trillion in 2013 but will account for only two per cent of the worldwide mobile services revenue as operators are struggling to increase profit margins. The revenues from mobile services stood at Rs. 1.1 trillion in 2012. According to Gartner, mobile connections in India are expected to grow to 770 million in 2013, up 11 per cent from 712 million connections in 2012. In current circumstances, the Indian telecom market will account for 12 percent of worldwide mobile connections, but just 2 percent of worldwide mobile services revenue (in constant USD) in 2013

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Some of the factors are which are hurting the Indian Telcos significantly
• The Mobile ARPU hasn’t shown any pace in growth over some time now even though the drop has been arrested by the operators. Thus operators are not adding incremental revenues. The ARPU of GSM mobile operators have declined by up to 24% during the period between 2008 and 2011
• Over the top service providers such as Facebook and WhatsApp are eating into the SMS cash cow.
• The legislative and regulatory uncertainties over taxes and other payments and agreements are bleeding the operators.
• With the Metros and Tier 1 cities hyper connected, the next wave of growth would be the rural hinterlands – However, further rural expansion of mobile services will come at a cost.

Indian Telcos are looking at mobile broadband services to be the next wave of revenue growth. Coupled with innovative solutions and services, associations which cut through different other eco-systems (media transmission) and local mobile apps which is key to break thru the multi-lingual geographies – Telcos are putting in place, strategies for addressing the data revolution. While 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. A report on Indian telecom authored by AT Kearney, states that non-voice revenues of mobile operators will increase to 27 per cent by 2015 from 14 per cent in 2011, of which about 15-20 per cent will come from mobile data, which is expected to grow at 126 per cent. The voice revenues will decrease to 73 per cent from 86 per cent during the same period. Proliferation of smart devices is accelerating this shift towards data. In 2008, only 3.8 per cent of handsets sold in India were smart phones. By 2011, this had increased to 8.1 per cent and is further expected to grow to 25 per cent by 2016

Relevant Applications for various segments are being put forth and with the launch of 4G and increasing reach of 3G services, the data revolution is about to roll in. Innovation in utility apps that help bring efficiencies 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, it is time to look beyond these and deliver apps that can have a sustained business model. India has a phenomenal pent up demand for mobile broadband and local mobile apps that solve everyday problems for consumers.

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