The number of 3G subscriber connections in India is forecast to reach 400 million within four years, representing almost 30 per cent of the country's total mobile connections, according to a study.
3G connections are set to grow three-fold between 2011 and 2015 as operators ramp-up rollout of new 3G networks, according to a new Wireless Intelligence study - India 3G Rollout (forecasts and market shares 2011 2015).
Indian operators spent a combined USD 15 billion in acquiring Wideband Code Division Multiple Access (WCDMA) 3G spectrum at auction last year and are forecast to jointly invest a further USD 2.5 billion in building the new networks and rolling out 3G services in 2011, it said.
More than 80 per cent of 3G connections would be based on WCDMA in five years, with the remaining 20 per cent on CDMA-based 3G networks, it adds.
"Competition in the Indian 3G space is likely to be intense as most operators have set ambitious targets," said Joss Gillet, Senior Analyst at Wireless Intelligence and author of the report.
The study notes that India's Circle A and Circle B service areas would account for 75 per cent of the country's 3G connections by 2015.
Even though initial 3G rollouts are concentrated in the so-called metro areas (Mumbai, Delhi, Chennai, Kolkata) they will soon be outstripped by fast-growing demand for 3G in more populous regions such as Punjab, Bihar, Andhra Pradesh and Haryana, it said.
But the situation is complicated by the fact that no 3G operator is able to offer a nationwide service, which will necessitate network sharing and roaming between operators.
Pricing 3G services appropriately in a market where around 200 million prospective users live on less than USD 2 a day, is also set to be a major challenge.
"Indian operators are betting on 3G services to stabilise ARPU (Average Revenue Per User) and increase non-voice revenues to around the 30 per cent mark in the coming years," added Gillet.
"Even though we do not anticipate a price war in the 3G space, profitability will take time due to the high investments required and the current need for additional spectrum.
While network-sharing deals will help speed-up the adoption of 3G services and increase economies of scale, it is clear that device availability and affordability will have a more immediate impact on demand in such a price sensitive market dominated by prepaid users", he said.
According to the study, by 2015, 3G market shares will more closely resemble the overall national picture: Bharti - India's largest operator - is forecast to command the largest 3G share (18 per cent), followed by Reliance (15 per cent) and BSNL (13 per cent).
