Cellphones in India

WSJ writes:

Companies are jostling to capture a bigger piece of one of the world’s fastest-growing markets — just this month, many of India’s cellphone companies slashed rates by more than 50%. With lower rates and new handsets priced at less than $50, a cellphone is within reach of millions of middle-class Indians.

Cellphone-service providers in India, including Hutchison Essar Telecom Ltd., Reliance Infocomm Ltd. and Tata Teleservices Ltd., will be adding two million subscribers a month for the foreseeable future, analysts say. That likely will lift the number of cellphones in India past the number of fixed-line phones before year end.

The growth and increasing competition show that cellphone companies — as well as international handset makers such as Nokia Corp. and equipment makers such as Nortel Networks Corp. — recognize India is at last a market worth fighting for. As more Indians go mobile, total cellphone revenue will double this year to almost $6 billion and double again over the next two years, analysts say.

With lower rates, the average revenue per subscriber per month has fallen more than 15% this year to less than $10. The secret to survival in this market, analysts say, is offsetting the decline by finding ways to get Indians to spend more money on data services. Indians can use their phones to download pictures or songs from their favorite films or get video clips of cricket matches. In the Punjab, India’s bread basket, wheat farmers can look up local and international prices, while fishermen in southern Kerala can check the different prices for their catch at each port before deciding where to dock. While data services account for about 5% of cellphone revenue, they will make up more than 20% by 2008, Ms. Desai of Gartner says.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.