Indian mobile industry to hit $24 billion in sales

NEW DELHI: India's galloping wireless industry, the world's fastest growing major mobile market, will see revenue growing 36 percent annually by 2009 as call rates drop and handsets become cheaper, research firm Gartner said.

But surging sales will come at the cost of thinner margins due to intense competition, and value added services such as ringtones and picture messages will increase their contribution to total revenue.

"Regulatory constraints have been eased in response to unrelenting market pressures and this has created ideal conditions for growth opportunity and investment," Kobita Desai, principal analyst, said in a statement on Wednesday.

Desai estimated India's cellular industry, which has about 60 million users, will post a revenue of $24 billion in 2009, accounting for 11 percent of the overall Asia-Pacific and Japan region sales.

India, Asia's third largest economy, boasts the cheapest call local mobile call rates in the world. Tariffs as low as 2 U.S. cents a minute are luring about 2.5 million new users into the booming market each month.

Desai said mobile penetration could reach 30 percent by 2009 from about 6 percent and the market could have more than 300 million connections in four years.

While carriers such as Bharti Tele-Ventures Ltd., 30.84 percent owned by Singapore Telecommunications Ltd., are tapping into underpenetrated rural areas, the industry's average revenue per user (ARPU) is declining as a bulk of the new entrants are from lower income groups.

"Operators should prepare themselves to work in business environments where ARPU levels are expected to be as low as $5 a month in the next 18-24 months," Desai said.