India to have 100 million 3G subscribers in 5 yrs

Research firm Crisil on Monday said that the 3G services industry subscriber base is likely to touch the 100-million mark by the end of its fifth year in operation.

The firm also said that it expects an investment of around Rs 2.6-lakh crore (Rs 2.6 trillion) into the segment over the next five years.

"We expect the 3G services industry subscriber base to touch the 100-million mark by the end of the fifth year of operations. Besides this, we are also expecting an investment of Rs 2.6 lakh crore over the next five years, of which 50 per cent would take place by 2010-12," Crisil research director Nagarajan Narasimhan said.

Moreover, 3G services will also generate an average revenue per user (ARPU) premium of around 25 per cent over 2G, he said.

The research firm also believes that with the launch of 3G services, there would be a shift in the competitive landscape in the Indian telecom industry.

"Given that no single player has acquired a pan-India 3G spectrum, we believe that the process of industry consolidation would be hastened. In addition, there will be significant pressure on profitability and the need to gain scale would induce players without 3G spectrum and new entrants to actively look at merging," Narasimhan said.

Narasimhan said that 3G services would lead to a shift in the competitive landscape in the telecom industry, with operators providing a distinct value proposition.

"The shift will provide a significant margin advantage to players providing 3G services. Along with other factors, it would also facilitate a round of consolidation in the industry, eventually bringing down the number of players in the sector from 12 to seven or eight," he said.