10 things you need to know about the Indian mobile market

PaulThe massive and fast growing mobile market in India has attracted many major companies, investors and entrepreneurs, but the promised riches do not come without huge risk. India has over 900M mobile subscribers and still growing, second only to China. However, there are significant challenges that need to be taken into consideration when entering the market. Here Paul Palmer, VP of Global Sales at Bubbly, formerly Bubble Motion, breaks down 10 key points you need to know before jumping in at the deep end.

1) While there are 900M+ subs, mobile operators are highly fragmented

bangalore_indiaThere are six mobile operators with around 100M+ subscribers – that’s basically the size of AT&T or Verizon in the US.  Then there is a long tail of regional operators as well – 12 operators in total.  This creates an environment of intense competition, where unprofitable price points are common and revenue share models are an absolute requirement.  On the positive side though, it means the operators can move very fast (at least in mobile operator terms) – it’s still a bit like ‘the wild west’.

Further complicating this fragmentation is the fact that all of the operators are divided into 23 circles (basically states) – often with independent networks, org structures and management teams in each circle.  Operators are starting to consolidate network resources, but it used to be quite common that a partner would have to deploy servers in each circle of an operator to have a nationwide deployment.

Source: Wikipedia
2) Mobile operators are extremely demanding

To a Westerner, everything will seem quite chaotic and unorganized, but this is normal everyday life in India. Meetings are frequently delayed and last minute requests for information is the norm. Indian operators will expect vendors to bend over backwards for them and take all of the risk of any deployment.  Moreover, there is no correlation between the size of the operator and their expectations – with the smallest operators sometimes demanding better terms that the largest ones.

3) The vast potential partnership ecosystem can be overwhelming

Depending on the service you are offering, different local partners will likely be needed. In many cases, the operators managed services contracts to large vendors, so if you are a small company with an interesting service, it’s usually easier to partner with a larger infrastructure supplier. However, one should always have a direct relationship with the operators when possible, as that’ll be the only way to keep things moving and transparent. The main infrastructure partners to approach are the usual suspects, Ericsson, NSN, Huawei, ZTE for infrastucture solutions, HP,  IBM, Wipro, Tech Mahindra for IT and companies like Mahindra Comviva, OnMobile, and One97 for VAS services.

4) You need to realize that India is not a single market

India has many regional languages and dialects as well as cultural norms and demographics across the country. For example, while everyone has heard of Bollywood, there is also ‘Tollywood’ in the Telugu speaking state of Andhra Pradesh or ‘Kollywood’ in the Tamil speaking state of Tamil Nadu. Needless to say, this is extremely important when launching a nationwide consumer service in India. The long tail in India’s case is the majority of the population, so regionalizing your service and marketing strategy is an absolute must.

Source: thehindu.com5) Feature phones still dominate

While smartphone penetration is increasing rapidly with nearly 60M smartphones today, this still is only a mere 6% of subscribers – the lowest penetration of any major mobile market in the world. Moreover, 95% of the market is prepaid and many subscribers carry more than one SIM card depending on price points at the time.

6) Data Plan Penetration is amongst the lowest in Asia

Only 8% of subscribers have a data plan today. This is, by far, the lowest penetration of any major mobile market globally.  It is quite common to find an iPhone user that doesn’t even have a data plan and just uses wifi hotspots. This means if you want to have a service for the masses, you either have to make it work without data (ie, voice, USSD, SMS, etc) or figure out a way to upgrade target users to data plans (which a lot of services are struggling to figure out).

7) Mobile advertising is still not a viable business model

Digital advertising spend accounts for less than 5% of overall advertising spend in India. This year, less than $30M USD will be spent on mobile advertising. Moreover, fill rates on mobile ads are often less than 20%. All of this makes it impossible to build a viable business off of this nascent revenue stream.

Source: bank.org8) Credit cards?  There aren’t any…

Credit card penetration in India is less than 2%. Therefore, mobile payment options are limited with very few electronic charging options outside of deducting a subscribers’ prepaid card. Thus, working closely with the mobile operators is an absolute must for mobile billing.

9) Indians are amongst the most price sensitive in the world

With stiff competition and price stingy consumers, mobile ARPU’s have fallen to less than $1.80 USD per month. Consumers have near zero brand loyalty and often choose based solely on price. If a service is free, it will easily gain tens of millions of users, but the real trick is how to monetize this large user-base.

10) Overcoming the challenges will reap significant rewards

When offering a service to customers in India to reach the masses you need to ensure that your product/service can be supported on any device and is not dependent on mobile data and the business model will likely need to rely on the mobile operators billing systems for the foreseeable future. You also need to factor in the vast regional differences to grow your service beyond a couple of the mainstream metros. If you can solve these issues though, there is an extremely massive and lucrative mobile market waiting for you.

Paul Palmer is VP of Global Sales at Bubbly – follow them on Twitter


  1. Simone Palmer says:

    Amazing article

  2. Sumit Goswami says:

    Paul, very well articulated and bang on
    Congratulations for the great article!

  3. _David_James_ says:

    Very timely article.


    Am I the only one to notice the irony, that despite India having over a billion consumers, (as of December 2012 India had about 867 million mobile handsets, second only to China,) there is NOT ONE handset manufacturer in India?

    If one amalgamates the cost advantages of manufacturing in India and the dearth of software engineers in just one city, I could easily make the acquisition happen with win-win both for Black Berry and Indian Investor(s).

    If Indian Investors And the mobile operators liste above believe they can sit smugly in their offices and smirk they can pull it off on their own, why have they not seed funded a manufacturing start up yet or pulled this off yet?

    Why do they lack the strategic vision or analytical skills to look beyond software? What deters bringing a handset manufacturer into India that already has an international brand?

    I would be happy to bridge the gap raise the funds or even do the MnA.

    I take 2% from both sides.

  4. Kavinder Pawahanee says:

    Paul good observations..Overall it aptly summarizes the Indian telecom market.

  5. Bhupesh Sehgal says:

    Hi David

    We have a huge population using BB handsets and services besides, most of the Large Mobile Manufacturers have development centers in India including Samsung and Nokia – atleast for the Software and App Development and NOKIA also had a Handset Manufacturing operations out of India (Chennai)

    On the Main Article

    One thing I would like to add to this market is that the Operators have used the PUSH strategy for VAS Sales – i.e. they have used the forced renewal of VAS Services to retain customers as most of the customers are not educated / tech savvy and this has resulted in the consumers not being Brand Savvy (to Mobile Operator Brands) as stated in the article, besides, the Regulator had to step in recently to chalk out regulations to safeguard the interests of the small customers who have been charged for VAS services that they never intended to opt-in for in the first place and did not know how to opt –out either.

    Second, I differ in my opinion on the other aspect Feature Phones & Data Services, India probably has the highest population of Face Book, You Tube and Mobile Based Search, (Mobile Device based usage) however, Yes I may agree that most of the users may be either using public network for web (Office or Café) or Home Broadband Connection for browsing or have the lowest category data plan as these are still price sensitive issues in India – as these are still not considered a necessity.

    This itself can be seen as an opportunity for penetration of Mobile Commerce to the masses as even the population that has never seen Computers in India is now open for Mobile Commerce this is specially true for the “B” and “C” towns of India.

    Like m-paisa in Kenya, we, in India, can probably adopt new mechanism for commerce / mobile payment mechanism instead of credit card as the Credit Card users base or even the banking customer population is far lower in India then the population of the mobile phone subscribers.

  6. Great collection of free text sms
    likemarathi sms. Read it, Share it, Suggest new one……

  7. Nice article. Good observation.

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