Business – Expect RoI on 3G services only after three years
Government of India’s decision to hike the reserve price for 3G services to generate more revenues from the auctioning may severely impact the growth of 3G services in the country, reveals Wireless Intelligence.
3G will follow WiMAX in being limited to niche areas mainly in metros such as Chennai, Delhi, Kolkata and Mumbai even though the subscriber base is predicted to cross the 60 million mark by 2013. BSNL and MTNL which have already launched their respective 3G service offerings but are witnessing low uptake for the same, are expected to have 280,000 by this year-end.
The high reserve price means the successful bidders will enter the segment at a high price point and thereby the RoI will be achieved not before three years. And the first network is expected to be rolled out only by fourth quarter of 2010.
“To trigger the fast adoption of high-speed network services, operators will have to focus on two key factors: affordability and availability. However, high license fees and the high cost of deploying 3G networks across the country means that return-on-investment is not likely to happen until operators have tapped the mid-term market potential, which we estimate will take at least three years,’ says Joss Gillet, Sr. Analyst, Wireless Intelligence.
Source: Wireless Intelligence
However the recent trend of infrastructure sharing seen in the Indian telecom industry will help the operators to keep their capex and opex at comparatively low levels.’
The high price point will lead the operators targeting the urban areas as an initial target group but then shifting focus to category ‘A’ and category ‘B’ circles.
“Even though mobile operators will focus on entry-level WCDMA devices below US$150, notably via partnerships with Original Design Manufacturers (ODMs), we expect them to target the high-end consumer segments at launch to counter inevitable collapsing margins,” adds Gillet.
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