India’s mobile services market is expected to grow eight per cent to Rs.1.2 trillion in 2013 but will account for only two per cent of the worldwide mobile services revenue as operators are struggling to increase profit margins, research firm Gartner said on Monday.
The revenues from mobile services stood at Rs. 1.1 trillion in 2012, Gartner said in a statement.
According to Gartner, mobile connections in the country are expected to grow to 770 million in 2013, up 11 per cent from 712 million connections in 2012.
"The mobile market in India will continue to face challenges if average revenue per unit does not grow significantly.
"If the prevailing conditions do not change in the Indian telecom market, India will account for 12 per cent of worldwide mobile connections, but just 2 per cent of worldwide mobile services revenue (in constant $) in 2013," Gartner Principal Research Analyst Shalini Verma said.
Indian telecom operators are faced with two major challenges -- growing their profit margin in the face of intense competition and successfully competing with over-the-top service providers like Facebook and WhatsApp.
"As mobile voice services continue to get commoditised in the country with the increased use of voice over IP and the probable termination of national roaming charges, mobile broadband is the area of opportunity for operators," Verma said.
She added that India has a phenomenal pent up demand for mobile broadband and local mobile apps that solve everyday problems for consumers.
Verma added that as the country plays catch up with the rest of the world in terms of mobile broadband adoption, telecom operators need to think of growing the top line through innovative services.
"Further rural expansion of mobile services will come at a cost.
"In India, innovation in utility apps that help bring efficiencies in a consumer’s life will bring in sustained revenue and will be relatively more difficult to replicate by new entrants.
"While social and video apps are doing extremely well in India, it is time to look beyond these and deliver apps that can have a sustained business model,” she said.
Operators need to insert themselves into the value chain of these new apps and services, Verma added.