Further, India’s late W-CDMA/HSPA entry and its low-cost 3G model could see the country leapfrog ahead of global penetration norms.
3G handsets in India are already available for a low $110.
According to leading vendors, 10%-12% of monthly handset sales are 3G-enabled devices. And there are an estimated 50-60 million 3G handsets already in circulation.
Financial services firm CLSA estimates India’s 3G customers could reach as many as 130 million by March 2013.
So much for the pros of investing in India, now here come the cons.
RCom’s debt of $6.2 billion is not to be sneezed at – and that’s only going to get worse with the rollout of a 3G network across 13 regions.
And with only 5MHz of spectrum per circle for 3G, any 3G success is quickly going to be impeded by spectrum limitations and further capex spending.
On the 2G front, with 12-14 operators already present in each of India’s 22 circles, and more GSM1800 operators to come, the tariff environment could get even worse.
The market could also be given a stir should Mukesh Ambani, Anil’s estranged brother, pick up a cellular play, now that their non-compete mobile agreement has lapsed.
The cream of market has already been scooped up - the next wave of subscribers will come from even more remote rural regions.
Etisalat is going to also have to add regulatory uncertainty to the mix as the jury is still out on the regulator’s proposed new 2G licensing regime, which includes the controversial recommendation that operators pay for spectrum held above 6.2MHz.