Growth and revenues slows

Gartner Inc, a technology and market research company expect India to have 770 million mobile subscribers by 2013, up on current number of 450 million, an average growth rate of 14.3%. Reflecting this slowdown, revenues will grow at average 12.5% to around US$ 30 billion by 2013.

Passing the peak

2008 growth appears unlikely to be repeated, subscriptions jumped 50% and revenues grew 24% over 12 months. While numbers are likely to remain strong, rates of growth are expected to slow from now on.

3 key indicators set to affect profitability

Although growth is still healthy, three indicators - churn rate, proportion of pre-paid subscriptions and average billing rates - suggest profitability will be hit.

Churn rates will increase from current levels of 53.2% to 59.6% by 2013, making harder for telco's to hold on to existing customers. Postpaid subscription market - most profitable service - is set to decrease from 7% of overall market to just 4% during the same period. Despite 3G and other value added services hitting the market, most new subscriptions will come from poorer rural India; this factor will inevitably drive down average bill sizes.

Consolidation

While there are currently 14 operators in the market, tougher conditions are expected to lead to sector consolidation. Gartner expect this number to drop to between 8 and 10 in two years. They also conclude that in the long term the market will be able to support just 5 major operators. Expect a phase of acquisitions.