India to become the 2nd largest cellular market in 2008

The cellular market in India is growing rapidly. In 2007 alone the Indian cellular added more than 80 million cellular subscriptions. By end of 2008, India will have more than 300 million cellular customers, according to estimates by Wireless Intelligence. In comparison, the USA is expected to have 270 million customers by the end of 2008. At this level,

India will surpass USA to become the 2nd largest cellular market by subscribers after China. In the 1Q 2008, India is forecasted to have 250 million cellular subscribers, which will be on par with the total cellular connections in the USA. To meet this mark, the Indian cellular market with grow 57% year-on-year in Q1 2008, the same growth seen in Q4 2007. India’s cellular penetration will be more than 20% in early 2008. In comparison, China’s cellular base grew by approximately 18% over the same period, but will have 40% market penetration in early 2008.

This continued growth is facilitated mostly by providing cellular service in rural areas, where penetration rates are extremely low (6% in April 2007, according to TRAI). However, providing cellular to the rural masses will also mean charging less, because in rural areas affordability and willingness to pay are lower. This also means that cellular carriers must find ways to reduce their costs, in order to maintain profit levels. As a result, Indus Towers has been formed by Vodafone Essar, Bharti and Idea Cellular to share 70,000 cellular towers units in India, which will reduce OPEX and CAPEX and improve coverage in rural areas.

The figure below shows the number of cellular subscribers and penetration levels 2005-2010 ( courtesy of Wireless Intelligence)

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India has ten GSM networks and six CDMA2000 1X networks. In 2007, GSM networks account for about 75% of total subscribers and grew more than 60% year on year. GSM subscribers are expected to pass 180 million in Q1 2008. In 2007, CDMA2000 1X connections grew by around 54% and is expected to have 65 million subscribers in Q1 2008. CDMA2000 networks are restrained by the limited availability of handsets, compared to a wide range of entry level GSM handsets.