High expectations for 3G in India

Shiv Putcha and Santosh Sathanur/Ovum
02 Dec 2010

Operators will launch 3G services into a crowded marketplace, which has up to 15 2G operators per circle and tariffs as low as $0.02 per minute. Ovum expects 3G to further widen the gap between the incumbents and 2G operators, accelerating the momentum for consolidation in the market.

With voice services still yielding the majority of operator revenues in India, designing and marketing 3G data services will be the key to faster returns on network investments.

However, in a challenging policy environment where there is uncertainty over the future availability of 3G spectrum, we expect that the market leaders will focus on the deployment of voice networks before they begin to introduce data-intensive services. Market challengers and niche players with less congested networks will be proactive in launching data-centric services by bundling them with devices.

India’s telecoms market has been a remarkable success story in terms of subscriber growth. However, recent growth has come at the expense of margins, and the industry is looking to the launch of 3G services to move it towards the next phase of profitable growth.

While Ovum views 3G as evolution rather than a revolution, we do see strong prospects for 3G in India. Starting from a small base in 2010, the number of 3G connections will grow to 142 million by 2015, representing a CAGR of approximately 80% over the next five years.

HSPA will dominate the subscriber mix, accounting for approximately 76% of total 3G connections, while EV-DO will account for the majority of remaining connections.

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