'3G, BWA to account for half of telecom revenues'

As telecom operators in the country struggle with decline in earnings per user, the next level of voice and internet services — 3G and Broadband Wireless Access (BWA) — is expected to account for almost half the revenues from wireless services four years down the line.

According to a study by industry association Federation of Indian Chambers of Commerce and Industry (Ficci) and telecom consulting firm BDA, 3G revenues in the country will reach $15.8 billion, 46 per cent of the total wireless revenue, by 2013.

The 3G subscriber base is expected to reach 90 million in five years. This will be 12 per cent of the total telecom subscriber base of 746 million.

“We had tabulated these numbers before the delay in the 3G auctions, so we assumed that 3G services would be rolled out by private operators by July 2009. But we’re hopeful that the government will carry out the auctions as soon as possible to reach the estimated number,” said Kunal Bajaj, managing director, BDA Consulting.

“Telecom carriers are facing declining margins per minute and deteriorating quality of service in urban areas. Given that 9 per cent subscribers contribute 29 per cent of revenues and 45 per cent of carriers’ margins, the introduction of 3G will help carriers migrate high-revenue customers to the new 3G network, with no congestion, and accommodate incremental subscribers on their 2G networks,” added Bajaj.

In the Indian market, which is predominantly voice-based, 3G will help increase the contribution of non-voice services like SMS and data card access to 23 per cent from 9 per cent at present, says the study.

Introduction of 3G services is also predicted to lift the revenues of the manufacturers of 3G devices. According to the study, revenues from sale of 3G devices are expected to be $11.2 billion with the high-price segment, that is, handsets above $200, contributing to 59 per cent of annual sales revenues. Driven by the demand in the replacement market, the annual sale of 3G devices is expected to cross 81 million, according to the study. However, it will pave the way for handset bundling across the board, it says.

The study estimates the broadband subscriber base in the country to increase over nine-fold in the next five years to 46.5 million, with a personal computer base of 75 million. Of the total, the number of 3G subscribers is expected to reach 22.4 million by 2013 with the sale of 13.6 million new modems (including data cards, routers and USB dongles) in the same year.