The Indian cellular industry is poised to grow at a compounded annual growth rate of 39 per cent, with subscriber base touching 70 million by 2007, according to a study conducted by Gartner India. The growth will chiefly be driven by the pre-paid segment.

"The Indian cellular market will continue to grow, as the cost of service and entry barriers go down. The market is projected to grow at a CAGR of 39 per cent, and net 70 million subscribers by 2007," Kobita Desai, principal analyst, Gartner India, said.

"The pre-paid card remains the core acquisition tool for all operators. And as the average revenue per user dips, it is time for operators to seriously introspect profitability," he added.

In fact, the pre-paid segment is expected to be the driving factor in the Asia-Pacific region. According to Gartner Dataquest research, pre-paid connections in the Asia-Pacific region will account for 65.8 per cent of total cellular connections in the region by 2007.

In 2002, the pre-paid segment accounted for 76 per cent of net new cellular connections, and 43.4 per cent of total cellular connections.

The research also indicates that the number of cellular connections in Asia-Pacific is expected to increase to 797.8 million by 2007, while revenue from cellular services will touch $142.9 billion.

In a press release, Foong King Yew, principal analyst for cellular communications, said: "Net new cellular connections in Asia-Pacific peaked in 2002. The growth rate will now steadily decline. This is particularly apparent in markets such as Singapore, Japan, South Korea, Hong Kong and Taiwan."

According to Yew, service operators will have to seek new revenue streams such as mobile data to drive growth.

"The contribution of mobile data to cellular services revenue in these markets is projected to exceed 26 per cent by 2007," Yew said.

New handset models with enhanced features, introduction of faster cellular networks, and new applications would result in the uptake of mobile data, he pointed out.

Dialing in...

According to Gartner Dataquest research, pre-paid connections in the Asia-Pacific region will account for 65.8 per cent of total cellular connections in the region by 2007.