India's mobile services market to reach Rs 1.2 lakh cr in 2013: Gartner

India's mobile services market will reach Rs 1.2 lakh crore in 2013, up 8% from 2012 revenue of Rs 1.1 lakh crore, according to Gartner. Mobile connections will grow to 770 million in 2013, an 11% increase from 712 million connections in 2012, the release said.

“The mobile market in India will continue to face challenges if average revenue per unit (ARPU) does not grow significantly,” said Shalini Verma, principal research analyst at Gartner. “If the prevailing conditions do not change in the Indian telecom market, India will account for 12 percent worldwide mobile connections, but just 2 percent of worldwide mobile services revenue (in constant US dollar) in 2013.”

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, such as Facebook and WhatsApp.

“As mobile voice services continue to get commoditized in the country with the increased use of voice over IP (VoIP) and the probable termination of national roaming charges, mobile broadband is the area of opportunity for operators,” said Verma. “India has a phenomenal pent up demand for mobile broadband and local mobile apps that solve everyday problems for consumers. Smaller mobile broadband plans using a sachet-style usage pattern appeal to Indian consumers.”

According to the Gartner report, India lags behind the world in terms of mobile broadband adoption. Further rural expansion of mobile services will come at a cost. So, Indian telecom operators need to think of growing the top line through innovative services. 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. Operators need to insert themselves into the value chain of these new apps and services, Verma said.