China and India poised for stellar mobile growth

China and India will be the world's largest mobile phone markets by 2010, accounting for a combined 30 per cent of all mobile users, new forecasts predict.

However, the average revenue generated per user in the two nations is expected to remain among the lowest in the world.

China is already the world's largest mobile market by number of users, according to research firm Ovum, and India is expected to move into second place ahead of the US by 2010. 

More than a fifth of the world's mobile phone users are in one of these two nations, but there is still considerable room for growth.

Only 30 percent of people in China have a mobile phone, and just 10 percent of India's population. China's population is estimated at 1.3 billion, and India's at 1.1 billion.

China will have more than 630 million mobile subscribers by 2010, Ovum predicts, compared to approximately 440 million at the end of last year. China is home to the world's largest mobile phone operator by number of subscribers, China Mobile. 

However, mobile operators will have to move outside their core urban markets, and adapt services to rural users to take full advantage of this expansion potential. China's rural population is estimated at close to 60 per cent of the total.

"Tailoring mobile services, tariffs and handsets specifically for customers in these areas can help operators achieve subscriber growth in rural regions," wrote Ovum analysts in a recent report on global mobile market trends.

But Ovum warned that moving into rural areas will require heavy investment to extend network coverage in some regions.

"In addition, customers in the rural regions tend to be poorer and are living in cash-based societies, so meeting their needs will be totally different to meeting those of city dwellers," said the report.

The shift away from urban users, together with an increase in competition, are key factors that will push down the average revenue per user by several percentage points, even as millions of new subscribers are signed up.

"Although these customers may use mobile services, it is often through prepaid subscriptions and usage levels are very low," said the analysts.

"These customers help operators increase volumes, but often have the effect of diluting total annual revenue per user."

Average revenue per user in China of $115 is forecast for 2007, a significant fall from US$119 in 2005.

In the US, the world's most lucrative mobile market, the average user spends more than US$500 per year.

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