2G subscribers using mobile value added services (MVAS) have been increasing and financial data from Airtel shows MVAS revenue growing at 21% YoY, compared with voice at 10% YoY, but here too the share is only 14% of total ARPU. The key reasons for the slow 3G ramp-up are that 2G data tariffs are still 60% cheaper.
Meanwhile, although 3G handsets have been on the rise it is still less than 10% of the total shipment. Also India's smartphone penetration is still the lowest in the region. These are key to data revenue ramp-up.
MVAS is about US$3bn in revenue but the spending is still the lowest in the region at 15% against China at 32%. To unleash the 3G data boom, India’s tariffs must fall further and handset penetration needs to rise besides the need for more content innovation.