Indian mobile-phone penetration raised to 65%, UBS forecast

Indian mobile-phone penetration raised to 65%, UBS forecast
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First Published: Fri, Apr 20 2007. 11 40 AM IST
Updated: Fri, Apr 20 2007. 11 40 AM IST
By Shailendra Bhatnagar/ Bloomberg
New Delhi: India’s mobile-phone penetration rate will probably climb to 65% in the next 10 years, UBS AG said, raising its forecast, after the regulator asked service providers to share transmission systems to speed up expansion.
“Sharing of passive infrastructure such as towers, shelters, generators, battery back-ups and security is likely to increase significantly among Indian mobile operators,” Suresh Mahadevan and Lydia Chan, analysts at unit UBS Investment Research, said lifting the forecast from 52%. “We raise our mobile penetration forecasts as we factor in enhanced tower sharing.”
India, the fastest-growing wireless market in the world, added a record 7 million mobile-phone subscribers in March as carriers such as Bharti Airtel Ltd, the nation’s biggest operator, attracted users with the lowest charges globally and expanded networks in villages. The Telecom Regulatory Authority of India (TRAI) said earlier operators should share relay towers and antennas to accelerate their pace of growth.
About 15% of India’s 1.1 billion people use mobile- phone services, which are offered at rates as low as 2 U.S. cents a minute. Indian operators spend between 60% and 65% of their network expansion costs on so-called passive infrastructure, according to the UBS note.
“Given the Indian mobile players operate on one of the lowest revenue per minute realizations, it is imperative that they optimize the capex spend and keep operating expenses under tight control,” the UBS note said. “Also, with sharing of passive infrastructure, mobile services can be extended to areas that are unviable in the past, especially rural towns and villages.”
Carriers such as Bharti, second-ranked Reliance Communications Ltd and Idea Cellular Ltd are likely to benefit from increased sharing of equipment, Mahadevan and Chan said.
The TRAI released guidelines to promote sharing of infrastructure amongst carriers. Leading players are expected to spend as much as $20 billion (Rs84,076 crore) in the next two to three years on equipment and infrastructure.
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First Published: Fri, Apr 20 2007. 11 40 AM IST
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