CIO —

India added close to 74 million new mobile telephone subscribers last year, making it one of the most attractive markets for mobile telephone operators and wireless equipment vendors.

The number of wireless subscribers grew 97 percent from 75.94 million at the end of December 2005 to 149.5 million subscribers at the end of December last year, according to the Telecom Regulatory Authority of India (TRAI) in Delhi.

The growth in the mobile telephony market has come after deep cuts in tariffs by mobile services operators, which cut into the average revenue per user (ARPU). Mobile service operators are now focusing on new services such as e-mail and music downloads to boost ARPU.

The country added 6.48 million mobile subscribers in December, while in November it added 6.80 million subscribers, TRAI said Monday.

Even as the mobile telephony market in India is booming, the number of fixed-line telephone subscribers dropped, suggesting that first-time users of telephones are opting for mobile phones. The number of fixed-line subscribers was down to 40.43 million in December as compared to 48.84 million a year ago, according to TRAI.

The Indian government is targeting 500 million telephones, both fixed and wireless, by 2010. Based on current trends, most of the demand for new connections is likely to come for mobile services.

The large growth in mobile subscribers in India has attracted foreign companies to invest in providing mobile services in the country. A recent relaxation of government rules allows foreign companies to hold up to 74 percent stake in a mobile services operator.

British mobile services operator Vodafone Group (VOD), for example, is bidding for the majority share of Hutchison Telecommunications International in Indian operator Hutchison Essar. But it may not be easy going for Vodafone, as there are a number of Indian and foreign bidders for Hutchison’s stake.

Multinational wireless equipment makers like Nokia, Telefonaktiebolaget LM Ericsson (ERIC) and Motorola (MOT) have set up manufacturing facilities in India after a large government-owned service provider, Bharat Sanchar Nigam (BSNL), started insisting that its suppliers manufacture a part of their products locally. The Indian government is keen on promoting local manufacturing in India, as it finds that the business process outsourcing and software outsourcing boom in the country has not brought benefits to semi-skilled workers.

India’s teledensity has grown by about 100 percent to 17.16 percent over the past two years, TRAI said.

-John Ribeiro, IDG News Service (Bangalore Bureau)

Check out our CIO News Alerts and Tech Informer pages for more updated news coverage.