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Consumer Insights - Evalueserve Whitepaper - Uptake of 3G Services in India

Consumer Insights - Evalueserve Whitepaper - Uptake of 3G Services in India

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07/29/2012

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SEPTEMBER 2009
Uptake of 3G Services inIndia
   W   h   i   t  e  p  a  p  e  r
 
 
 
Uptake of 3G Services in India
Executive Summary
Mobile Subscriber Base (Forecast)
020040060080010001200200820092010201120122013
   i  n  m   i   l   l   i  o  n  s
Urban - Above Poverty LineRural - Above Poverty LineUrban - Below Poverty LineRural - Below Poverty Line
The beginning of 2009 wasmarked by a momentousdevelopment in the Indiantelecom market – theadvent of third-generation(3G) networks. After a longwaiting period dotted withseveral rounds of delay,the Indian governmentfinally allowed two state-owned operators—BharatSanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited(MTNL)—to roll out 3G services in over 12 Indian cities. Although the ball hasstarted rolling, India’s 3G market will gather proper steam when private telecomoperators are also allotted 3G spectrum. According to Evalueserve estimates, thetotal mobile subscriber base in India will cross the 850-million mark by end-2012and will reach nearly one billion by end-2013. Evalueserve also estimates thatabout 275 million Indian subscribers will use 3G-enabled services, and the totalnumber of 3G-enabled handsets will reach close to 395 million by end-2013.With the availability of 3G spectrum, private operators are expected to deploy 3Gservices in more than 30 Indian cities. Initially, operators are likely to focus onvoice services; however, over the years, revenues are also expected to begenerated from data- and application-related services.
Mobile Subscriber Base in India
Owing to the rising income per household and improving standards of living andservice quality, mobile penetration in India has been increasing rapidly over thepast few years. The purchasing power of the population above the poverty line willplay a vital role in the growth of the Indian wireless industry.During 2005–2008, India’s overall subscriber base recorded an impressive growthof 66 percent (CAGR). As of end-2008, the total number of mobile service users inthe country stood at 346.9 million. According to Evalueserve estimates, the mobilesubscriber base in India is expected to increase at a CAGR of 23 percent during2008–2013 and will reach nearly one billion by end-2013. The growth in this sectorwill be primarily driven by increasing adoption of mobile services by the ruralsegment, which is largely untapped as of now.
Mobile Penetration in 2013 (Forecast)
0%20%40%60%80%100%120%140%160%Urban – AbovePoverty LineRural – AbovePoverty LineUrban – BelowPoverty LineRural – BelowPoverty Line
The overall mobile penetrationis expected to reach 78.3percent in 2013 from about30.0 percent in 2008. In 2013,the penetration is expected toreach 142.5 percent, 79percent and 15 percent in theurban (above poverty line),rural (above poverty line) andurban (below poverty line),respectively. However, therural (below poverty line)segment will remain relatively dormant due to low purchasing power.
2
www.evalueserve.com 
 © 2009 Evalueserve, Ltd. All Rights Reserved
 
 
3
www.evalueserve.com 
 © 2009 Evalueserve, Ltd. All Rights Reserved
Uptake of 3G Services in India
Subscribers Base Breakup (Forecast)
0200400600800100012002008 2009 2010 2011 2012 2013
   I  n  m   i   l   l   i  o  n  s
2G Subscribers 3G Subscribers
Share of Customer Segments in 3G in 2013(Forecast)
80%20%0%0%Urban – Above Poverty LineRural – Above Poverty LineUrban – Below Poverty LineRural – Below Poverty Line
3G Subscriber Base
Evalueserve believes that the number of 3G subscribers in India will grow at arapid pace during 2010–2013. This growth will be fuelled primarily by a decline inthe price of 3G services, resulting from fierce competition among private players.The launch of 3G services in India will improve consumers’ experience byproviding high-speed Internet access and better quality of voice and data services.The services will be available in both urban and rural areas, with initial focus onurban customers. The following are some of the major factors that are likely todrive the adoption of 3G services in India:
 
Demographic Factors
– Since
 
about 54 percent of the total Indian populationis aged below 24 years
1
, 3G service operators will mainly target this segment.
 
Income Level
– 
 
Increasing purchasing power of the average telecom servicesconsumer will promote the adoption of 3G technology-based innovativeservices.
 
 
Pricing
– 
 
Evalueserve anticipates a price war among the private operators togain market share in the initial stage. Lower price and higher disposableincome of customers will result in increasing adoption of 3G services.
 
 
Service Domain
– 
 
3Gservices such as videotelephony, bankingservices, mobile-learning and mobile-governance provideconvenience andmobility. Easy access tobanking services isexpected to attracturban consumers, while mobile governance will be more popular among ruralconsumers
.
The growth in the 3Gsubscriber base will bedriven primarily by theadoption of the service bythe Urban (Above PovertyLine) customer segment.This segment is expected tobe the fastest adopter ofthis new technology. Theurban (above poverty line)segment is expected toaccount for about 80 percent of the total 3G consumer base by 2013. The BelowPoverty Line segment is expected to remain dormant over four to five yearsfollowing the launch of 3G. The Rural (APL) segment will witness growth only after2011 with the basic 3G service portfolio coming of age and the proliferation ofcustomised services focused on the rural markets.
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Poverty ratio for urban and rural regions have been computed using the consumption data for 30-day recall period 
 
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India a Potential for 3G Market – A Feasibility Study, IIT Kharagpur 

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