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Summary:

The Indian cell-phone boom isn’t showing any signs of slowing down. Indian mobile operators are adding around 8 million new subscribers a month; February’s tally of 8.46 million brings the total to 246 million, making the country second only to China. Sure the ARPUs are low […]

The Indian cell-phone boom isn’t showing any signs of slowing down. Indian mobile operators are adding around 8 million new subscribers a month; February’s tally of 8.46 million brings the total to 246 million, making the country second only to China. Sure the ARPUs are low compared to those in the West, but I find it amazing how quickly the market has grown. I remember going there in 2004 and being amazed by the mobile frenzy. At the time, there were 34 million subscribers and hopes of hitting the 100 million-subscriber mark. They are clearly way past that. I wonder, how long can this growth continue? What is the natural limit to the market? Any theories, people? [via Unstrung]

  1. I wouldn’t be surprised that you’ll see the 500 million mark hit in less than 24 months. When I was there in November, it seemed that everyone and their mother had one. And I was amazed at how many people had high-end headsets. I think the logical plateau is looking at the percent of mobiles in Europe/North America for the population.

    ps: you might want to get rid of the comment spam on the above mentioned link.

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  2. Yes I am not surprised at the growth rate either. Given the poor nature of the wireline infrastructure, long wait times and lack of rural reach make wireless much more viable.

    In addition to overall accessibility the price points have been significantly lowered down by the big players in the market. It is super easy to go get a phone and charge it up with minutes and get going. You can pretty much do that at any 7-11 types stores throughout India.

    Finally the networks have done a great job. They have really spread out and connected most parts of the country. I remember traveling by train in North India and using a Nokia CDMA device with laptop (over bluetooth). The connection never dropped over couple hours.

    PS — The growing trend now is that people have fixed wireless devices at their homes as a landline replacement. Way better than any wireline setup.

    Just my 2 cents or 2 paise ;-)

    Abhishek

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  3. 246 million, hmmm

    I live in India, and well, absolutely everyone is struck by the pace at which the mobile market has grown, leading to a number of jokes all around and in the media…but it is indeed true that even some beggars use mobile phones in India ( at least in Chennai, where I live)…makes me wonder about the maslow’s hierarchy of needs, but oh well!

    Logical upper limit? Well, assuming beggars are the bottomest of the pyramid (I doubt they are, reportedly some of them are pretty rich), I think it could soon reach (forumula) {[The total population that could theoretically use a mobile phone = approximately 750 million]-[some pathetically poor people = about 75 million]-[some oldies and folks who simply dont want to use it like my dad = (guessing) about 50 million]}*1.1 = approximately 650 million mobiles, by the end of 2009, or by middle of 2010. Oh, the 1.25? Some folks use more than one mobile connection / phone (and I understand this is about 10-15% of the total).

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  4. Thanks for highlighting the fastest growing cell-phone market in the world. My 2 cents? Inspite of these big numbers, barely 23% of the population owns a phone. So, plenty of scope for growth. However, if the right steps are taken, it could lead to a lot of wealth and value generation. Details in my recent blog post here: http://startupnewz.com/blog/2008/01/07/mobile-vas-in-india/

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  5. Hi,

    I think speculating on a number would be tough. A better approach would be to look at the places where these telcos can penetrate.

    All the large cities and towns are heavily populated with mobile users now. Almost everyone above 14 and below 65 has a mobile phone at these locations. The challenge would be to penetrate the rural markets.

    And then there are lot of things to take care of – regulatory issues (every new connection application should have ID documents, tax documents), infrastructure issues (the last mile connectivity, spectrum etc), cost of ownership (connections etc).

    And this might come as a surprise, less than 3% of mobile users in India have more than Rs. 100 (about $3) as balance in their pre-paid connections. This makes them useless for VAS and other mobile applications.

    Again personal thoughts.

    Regards,
    SG

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  6. Mark Pesce did a great essay on the mobile growth in India and how the mobile phone is enabling the Kerala fishermen to amass wealth by calling the fish markets along the coast here’s the relevant paragraph .

    http://blog.futurestreetconsulting.com/?p=30

    “” Network Effects

    For the past several thousand years, the fishermen of Kerala, on the southern coast of India, have sailed their dhows out into the Indian Ocean, lowered their nets, and hoped for the best. When the fishing is good, they come back to shore fully laden, and ready to sell their catch in the little fish markets that dot the coastline. A fisherman might have a favorite market, docking there only to find that half a dozen other dhows have had the same idea. In that market there are too many fish for sale that day, and the fisherman might not even earn enough from his catch to cover costs. Meanwhile, in a market just a few kilometers away, no fishing boats have docked, and there’s no fish available at any price. This fundamental chaos of the fish trade in Kerala has been a fact of life for a very long time.

    Just a few years ago, several of India’s rapidly-growing wireless carriers strung GSM towers along the Kerala coast. This gives those carriers a signal reach of up to about 25km offshore – enough to be very useful for a fisherman. While mobile service in India is almost ridiculously cheap by Australian standards – many carriers charge a penny for an SMS, and a penny or two per minute for voice calls – a handset is still relatively expensive, even one such as the Nokia 1100, which was marketed specifically at emerging mobile markets, designed to be cheap and durable. Such a handset might cost a month’s profits for a fisherman – which makes it a serious investment. But, at some point in the last few years, one fisherman – probably a more prosperous one – bought a handset, and took it to sea. Then, perhaps quite accidentally, he learned, through a call ashore, of a market wanting for fish that day, brought his dhow to dock there, and made a handsome profit. After that, the word got around rapidly, and soon all of Kerala’s fisherman were sporting their own GSM handsets, calling into shore, making deals with fishmongers, acting as their own arbitrageurs, creating a true market where none had existed before. Today in Kerala the markets are almost always stocked with just enough fish; the fishmongers make a good price for their fish, and the fishermen themselves earn enough to fully recoup the cost of their handsets in just two months. Mobile service in Kerala has dramatically altered the economic prospects for these people.””

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  7. easily 500M in few years and the high end smart phone is also slowly growing. Apple will be a big hit in India, when introduced…

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  8. Natural limit to the mobile market = population – long term luddites = 99.9% population

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  9. The worst thing about the mobile phone penetration is that the auto-drivers also carry one, and they stop the auto every now and then to take a call!

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  10. Om,
    The industry does a masterful job of over reporting subs, especially pre-paid. I am convinced that the industry that 15%-20% of subs are inflated.

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