MVNOs pave way for Indian mobile boom

Last week’s decision by the Indian regulator to allow MVNOs to operate in the country will pave the way for carriers without a 3G licence to offer more advanced services.

Analysts at telecoms.com parent and research house Informa Telecoms & Media said that the MVNO model offers GSM operators without a 3G licence a welcome opportunity to offer WCDMA services.

Informa forecasts that mobile broadband revenues will reach $3.9bn in India in 2013 and if GSM operators want to capture a share of this they have no option but to offer WCDMA services.

“The limit on WCDMA spectrum means that many GSM operators will need to follow this route if they are to offer WCDMA services, assuming the WCDMA operators allow them to use their network,” said James Moore, research analyst at Informa.

Last week, the Indian government voted in approval of the Telecommunications Regularity Authority of India (TRAI)’s recommendations to allow MVNOs in the country.

However, Informa notes that opportunities for GSM MVNOs are more limited, because the GSM space in India is so crowded. “An opportunity here will have to be orientated towards targeting a particular niche segment,” said Moore. “It’s going to be incredibly difficult for MVNOs to make their presence felt in the Indian market as it has some of the lowest mobile tariffs in the world.”

Informa believes that opportunity for start up MVNOs offering basic voice and SMS is much less obvious in India than in Europe where mobile operators’ own retail operations are incredibly costly and sometimes inefficient.

“Many European MVNOs only employ 10 or 20 people whereas mobile operators have huge in-house retail teams, a shop in every high street and pay huge connection fees to third party service providers and dealers'”, said Mark Newman, Informa’s chief research officer. Indian operators on the other hand are much leaner and spend less on retail, the result being that they are able to set prices as low as $0.01 per minute, Newman notes.

Despite its relatively modest share of the global mobile market, the MVNO sector remains robust and shows plenty of potential for growth, according to Informa. The developing markets of the Asia Pacific region still offer a fairly immature MVNO market but the analyst predicts the Indian market will help to boost MVNO subscriber numbers towards the end of the 2008-2013 forecast period.

Virgin’s success in entering the Indian mobile market through a franchise agreement with Tata was an early indication of the potential in the Indian market. By 2013 the Asia Pacific region, including India, will be the fourth largest MVNO market, with only Western and Eastern Europe and North America constituting larger regional markets.

Although MVNO subscriber numbers in the Asia Pacific developing region were only 14.3 million in 2008, by 2013 they are forecast to hit 20.4 million. Much of the growth in the Asia Pacific region is expected to come from developing markets such as India.