Cellular services segment in India, the world's fastest growing wireless market is expected to grow more than double to $25 billion by 2011, global consultancy and research firm Gartner has said.
Total earnings of cellular services market in 2006 was $8.95 billion and would reach $25.617 billion by 2011 growing at a compounded annual growth rate (CAGR) of 18.4 per cent, Gartner said on Wednesday.
Cellular market penetration is also projected to increase from 12.7 per cent in 2006 to 38.6 per cent in 2011.
This overall penetration will primarily be driven by an increased focus on the rural market. By 2011, Gartner expects 58 per cent of the rural population and 95 per cent of the urban population to be covered with mobile connections.
"With more marginal users forming the bulk of the addressable market, low service costs and inexpensive handsets will help to unlock the inertia and facilitate adoption of mobile services," Gartner senior research analyst Madhusudan Gupta said.
The growth would be restrained because of the problems regarding allocation of scarce spectrum. This could have an impact on expansion plans and the quality of service because of inadequate investment in or upgrading of networks.
Indicating that there was still scope for reducing mobile tariff, Gupta said although call rates have reduced to about 2.6 cents per minute, it remained high compared with fixed line rates at 0.9 cents per minute.
The rural market presents immense growth opportunities as mobile penetration was just two per cent. Many companies are planning to tap this market by introducing handsets that would cost below Rs 1,000, Gartner said.