Boston, MA -- (SBWIRE) -- 12/21/2012 -- BMI View: The Indian telecommunications market has experienced a considerable amount of challenges in the last few years due to constant regulatory disputes and a hostile business environment, which includes an aggressive price war, which have eroded operators' profitability. Despite the country's significant growth potential, the industry is struggling to capitalise on the opportunities, which will remain the central theme in the near future as we do not expect the market to reach a swift resolution of the complicated issues.

Key Data

- Market saturation and cancellation of licences have resulted in a downgrade to India's mobile subscriber forecast.
- The effects of tariff rate hikes have seemingly started to fade; industry-wide ARPU declines could soon resume.
- While fixed broadband demand remains healthy, the growth momentum is slowing in light of increasing network expansion cost.

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Key Trends & Developments

The Indian government has finally set the reserve price for 2G spectrum that was freed up after the Supreme Court cancelled 122 licences in February 2012. The Hindu reported that the Union Cabinet has fixed a minimum price of INR140bn for 5MHz of pan-India 2G spectrum in the 1,800MHz GSM band. Meanwhile, the reserve price of 5MHz of CDMA spectrum is set at INR182bn.

In collaboration with the e-Technology Group (a specialist unit of IMRB International), the Internet and Mobile Association of India reckons that India's mobile VAS market will grow by 32% in 2012 to reach INR260bn before increasing by another 28% in 2013. At present, mobile VAS account for 27% of Indian operators' ARPUs.

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