New Delhi: The increasing adoption of mobile Internet, fuelled by the proliferation of affordable smartphones and lucrative data plan offers, is expected to drive profitability for telecom operators over the next few years, a report by CARE Ratings said on Thursday.

“With increasing penetration and a gradual fall in price, mobile data will drive up the share of the non-voice revenue for the telecom operators," the report said, adding that online video consumption is the likely key driver.

Share of revenue from non-voice usage is expected to increase to 25-30% over the next couple of years from the current levels of around 20%.

“The increasing data revenue is critical to supplement the traditional voice revenue; this shall provide telecom operators with diversity in growth avenues and better profitability," the study noted.

At present, mobile data contributes around 50% of the total non-voice mobile revenue of telecom operators.

“The increased affordability of smartphones and tablets is playing a major role in taking mobile internet to telecom subscribers. As per industry estimates, the number of smartphone users in India is expected to be over 100 million by the end of 2014," the report said.

However, higher use of Internet-based messaging apps such as WhatsApp has killed the prospects for short messaging services (SMS), which had been a major contributor to the non-voice revenue segment of the telecom service providers.

Outgoing SMSes per subscriber per month fell to 28 in the quarter ended 31 December from 39 in the same quarter a year ago for GSM (global system for mobile technology platform) service providers, while it fell from 21 in the September 2013 quarter to 17 in three months a year later for CDMA (code division multiple access technology platform) service providers.

Subsequently, revenues from SMS for GSM service providers declined from 5.84% of the total revenue in the September 2013 quarter to 3.39% a year later, while for CDMA service providers it declined from 1.80% to 1.66% for the same period, the report said.

On 31 December, on a total wireless subscriber base of 886 million, the number of subscribers who accessed Internet through mobile devices was 220 million, as against 143 million on a total subscriber base of 868 million on 31 March 2013.

The growth in data traffic, driven by both increasing number of customers accessing mobile data and higher amount of data consumption per customer, albeit with decline in average realizations on data revenue earned from providing data services, will provide a boost to profitability of telecom operators, the report said.

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