Call rates to fall, more of VAS on your mobile

Reliance is offering calls at 50 paise a minute in a prepaid package. Virgin has already offered 10 paise for incoming calls. This is just an indication of the windfall gains that a mobile subscriber can expect in the days to come.

The race among mobile telecommunication service providers translates in to a growing opportunity estimated at more than 700 million by 2012 from the current 300 million, at a CAGR of 21%, says strategic research company IndusView that advises multinational companies on business opportunities emanating from India’s fast growing economy.

IndusView says in an email response that “Communication is a necessity.” “The related costs of owning a handset and usage charges (tariffs) in India are among the lowest in the world. To add to that, the service providers are offering innovative tariff packages even while touching the lowest band and are willing to further lower the packages to bring new subscribers in to their fold,” says Mr. Bundeep Singh Rangar, Chairman of IndusView Advisors Ltd.

Apart from the vanilla voice and text services that the mobile services are widely associated with, the advent of next generation platforms like 3G and progressively 4G, will exponentially accelerate the possibilities of innovative applications that can be bundled on to the networks and delivered at the subscribers' finger tips in the hi-tech mobile handsets, Mr Rangar says.

The subscriber growth targets and evolving technology landscape calls for corresponding high capital investments which is pegged at about $73 billion over the next five years. And, a major chunk of the investment is expected to be realized through Foreign Direct Investment (FDI), particularly in the area of mobile communication.

The recent string of investments in Indian telecom companies, including, Tata Teleservices Ltd by NTT DoCoMo, Inc; Unitech Telecom, the telecom arm of India's second largest real estate developer Unitech Ltd by Norwegian telecom firm Telenor ASA, world's seventh largest telecom service provider at $1.36 billion; and Swan Telecom, a start-up GSM telecom service company of a Mumbai-based real estate developer Dynamix Balwas Group by Dubai-based Emirates Telecommunications Corp (Etisalat) at $900 million; or, South Africa's largest telecom company MTN Group's attempts to enter the Indian market are examples of overseas companies that have exhibited confidence in the potential of the Indian market.

Stating that the country’s tele-density has jumped to about 30% now from less than 1% in the 80s, Mr Rangar points out that there is still a large population that needs to be offered the benefits of the basic communication services – that is how the target of achieving a tele-density of about 45% is set for the next five years by the government of India. The service providers – both the state owned and the private sector – would be aiming to surpass that target and garner the maximum possible chunk of that potential subscriber base.