India Calling

Today NTT DoCoMo joined the bandwagon of foreign operators investing in India with a 26% stake in TTSL for a whooping 2.7 bn dollars! Interestingly the investments are meant for Tata's GSM roll out. This has been on the heels of investments by Telenor in Unitech and Etisalat in Swan telecom.
The two factors driving these investments are a large population and low penetration. India with a population of 1.3 bn has penetration levels of around 30%. Pundits believe that this penetration will rise to 80% over the coming decade. With Television the most penetrated white good in India reaching 70 mn households,this seems like a distinct possiblity. The mobile phone is a personal device while a Television meant for the entire family. There will eventually be more number of mobile phone connections than cable TV.
By the time the new operators launch late next year the penetration levels would be around 40%. Thus they would have an opportunity to compete for the balance 40% pie. Assuming ten active players in the market gaining a fair share of the incremental subscriber growth the new operators would have around 40 mn customers each. These new customers would be primarily from the low income group and would fetch an ARPU of around USD 4. Thus with the market saturating these operators would be lookingat an annual revenue of USD 1.9 bn.
Thus the new entrants have plenty to fight for and it will be interesting to see if in the near future the rule of 4 will apply in this industry. The coming years are going to be intense..