The number of 3G subscriber connections in India is forecast to reach 400m within four years, representing almost 30 per cent of the countrys total mobile subscribers.

According to a new Wireless Intelligence study, India 3G Rollout – Forecasts and Market Shares 2011 – 2015), 3G connections are set to grow three-fold between 2011 and 2015, as operators ramp up rollout of new 3G networks.

Indian operators spent a combined $15bn in acquiring WCDMA 3G spectrum at auction last year, and are forecast to jointly invest a further $2.5bn in building the new networks and rolling out 3G services in 2011.

Seven Indian operators acquired 3G spectrum last year, in addition to the two state-owned operators (BSNL and MTNL) that had already been awarded 3G airwaves ahead of the private auctions. The study notes that over 80 per cent of 3G connections will be based on WCDMA in five years, with the remaining 20 per cent on CDMA-based 3G networks. Operators Reliance Communications and Tata Teleservices Ltd (TTSL) have both offered 3G CDMA for a decade, but both are also in the process of migrating to GSM/WCDMA, and were the first two private operators to launch services using new WCDMA spectrum in Q4 2010. Reliance and TTSL are set to command 3G market shares of 39 per cent and 30 per cent, respectively, this year.

However, 2011 has already seen a succession of rival launches – including Bharti (in January), Aircel (February) and Vodafone (March) – and Wireless Intelligence forecasts that all new WCDMA-based operators will have launched services by June 2011. This means that, by 2015, 3G market shares will more closely resemble the overall national picture: Bharti – Indias largest operator – is forecast to command the largest 3G share (18 per cent), followed by Reliance (15 per cent) and BSNL (13 per cent).

“Competition in the Indian 3G space is likely to be intense, as most operators have set ambitious targets,” says Joss Gillet, senior analyst at Wireless Intelligence, and author of the report. “Market share growth clearly depends on how fast operators can deploy 3G networks in their respective licensed areas, and how rapidly they can address demand in rural areas. Nevertheless, 3G will remain a niche market for some time in India, and 2.1GHz networks will initially be mainly used to improve voice quality and reduce congestion in existing 2G networks.”

The study notes that Indias Circle A and Circle B service areas will account for 75 percent of the countrys 3G connections by 2015. Even though initial 3G rollouts are concentrated in the so-called metro areas (Mumbai, Delhi, Kolkata) they will soon be outstripped by fast-growing demand for 3G in more populous regions such as Punjab, Bihar, Andhra Pradesh and Haryana, the report says. But the situation is complicated by the fact that no 3G operator is able to offer a nationwide service, which will require network sharing and roaming between operators. Pricing 3G services appropriately, in a market where around 200m prospective users live on less than $2 a day, is also set to be a major challenge.

“Indian operators are betting on 3G services to stabilise ARPU and increase non-voice revenues to around the 30 per cent mark in the coming years,” adds Gillet. “Even though we do not anticipate a price war in the 3G space, profitability will take time, due to the high investments required, and the current need for additional spectrum. While network-sharing deals will help speed-up the adoption of 3G services and increase economies of scale, it is clear that device availability and affordability will have a more immediate impact on demand in such a price sensitive market, dominated by prepaid users.”

The report is available to Wireless Intelligence customers.