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Indian Telecom Industry: Sea of Opportunities

Indian Telecommunications Industry: Sea of Opportunities

With over 860 million subscribers, India is the fastest growing and second largest telecom market in the world. After the successful 3G spectrum auction in 2010, telcos are now busy rolling out 3G services in a phased manner.

Top Telcos such as Airtel, Reliance, BSNL and Vodafone hold licenses for major revenue generating circles and are expected to account for 2/3rd of 3G connections by 2015.  By the end of 2011, India is expected to have over 15-20 million 3G subscribers and by 2015, this number is expected to reach well above 250 million, contributing to over 25% of the total subscriber base in India.

India’s 3G roll out presents tremendous opportunity to all telecom partners, especially due to increased propensity towards data consumption. Revenue from value-added services (VAS) contributes to less than 10% of overall operator’s revenues currently. But by 2015, this is likely to double upto 18-20%. From the current US$ 3.2 billion, VAS is projected to reach US$ 12.2 billion by 2015, out of which 3G alone will contribute over 70% of the revenue share.

Non-messaging VAS segment will lead the growth, clocking a compound annual rate growth (CAGR) of 33%, up from US$ 2 billion currently to US$ 8.5 billion by 2015. Mobile Internet, Music and Video Services will contribute to 90% of the total non messaging data revenue.

Software vendors are gearing up to tap the opportunity. They are trying to engage in close partnerships with carriers and handset makers, to launch new apps and services fit for consumption on 3G networks. Especially with the launch of numerous micro brands/ private handset labels, much action is expected in coming days for this particular part of the telecommunication value chain.

Collaborations to watch out for, such as Micromax’s tie up with Nazara to pre-load multiplayer games, Lava’s tie up with Astute for pre-loading utility apps and Samsung’s tie ups with software vendors like Ibibo, India Games, Apalya and MapmyIndia for preloading various 3G related software are just the tip of the iceberg.

Since software vendors are numerous and lack control on billing and payment mechanisms, they offer very limited differentiation, which marginalizes their role in the value chain and also their revenue share. To aim for bigger bite of revenues, software vendors will have to create differentiation based on multiple reach to customers, exclusive and up-to-date content and forging much tighter partnerships with telecommunication partners by providing technology deployment and full service support.


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This entry was posted on August 19, 2011 by in Asia Innovation Consulting and tagged , , , , , .
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