India’s rapidly growing mobile phone sector is low budget but brand-conscious, says the country’s second-largest mobile operator.
Krishna Durbha, head of marketing at Indian giant Reliance Infocomm, made the comments at a Telsyte meeting in Sydney where he described the Indian market as completely unlike any other in the world. “It’s a market of very low budgets. I think that’s one thing you’ve got to understand when you get into the Indian market. Extremely low cost, extremely brand-conscious, but extremely value conscious. It has to be the right brand at the right price,” he said.
Durbha’s company is India’s second largest operator, with 40 million subscribers “and growing.” Last month, Reliance added 1.35 million subscribers, while India as a whole added 7.34 million subscribers. “The market is growing at 85 per cent, which is second only to China... the great thing for telecoms is... we have a population of 1.15 billion people. That’s a lot of people,” said Durbha. “We believe India has the potential for 690 million mobile subscribers... India is getting much more mobile.
Essentially India is a very young market. More than 70 per cent of the people are less than 33 years old. 35 per cent are less than 18 years old, so that possibly makes us the most youthful market but that also makes us the most exciting market in terms of the future demand... there’s almost an unending supply of customers.”
Durbha said that although India’s mobile market is expanding at an unprecedented pace, average revenue per user is very low. “US$833 is the GDP per capita income. $131 is the average total cost of ownership for a mobile phone, that’s the cost of the handset plus the cost of the annual ARPU, so typically the cost of the handset’s about $40...
so that gives you about $9 left in ARPU per month,” he said. “26 per cent of a person’s income they can afford to spend on telecoms. So if the cost of the handset plus the monthly ARPU comes to 26 per cent, yes he’s going to buy a mobile.”
The Indian market is being driven by the world’s lowest call costs, but also by a growing market for mobile content such as ringtones. “Low call costs are driving this,” Durbha said. “Call costs now are about a cent a minute. Some areas have 500 minutes per person per month. That’s one hell of a lot of talking,” he said. A recent study estimated the Indian mobile content market to be worth $70 million, a “very conservative” figure according to Durbha. “Bollywood music is very big... it’s amazing how much people with low ARPU’s spend on ringtones.”
He also said that the content market was totally unlike western markets. “There’s no youth... we tried to go get the youth, but the youth shows up as being between 21-45. We’ve even got a pink phone for the men. There are so many different things in India, so we’re experimenting. It’s an amazing market,” he said.
Durbha noted that India is following Western trends by converging telecoms and media, as Reliance also owns 53 TV licenses and a cinema group. “It all converges at the top... media, telecoms, that’s the way we are trying to grow the market,” he said, adding that mobile TV is growing as well as 3G and WiMax development. “3G has been significantly delayed by a lot of policy issues,” he said... WiMax is being talked about but it hasn’t been decided on for broadband in India.”
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