Bangalore: Mobile subscriber base in the country is estimated rise by 9 percent to 696 million connections this year, according to technology researcher Gartner.
India's mobile subscriber base stood at from 638 million connections in calendar year 2011.
Total mobile services revenue in India is projected to reach USD 30 billion (in constant US dollars) in 2016. The Average Revenue Per User (ARPU) began to stabilise in 2011 – a notable change from the double-digit decline of ARPU between 2008-2010, it said in a statement.
"The staggering growth of mobile connections has been driven by the expansion of mobile services in semi-urban and rural markets and the availability of cheap mobile devices," said Shalini Verma, principal analyst, Consumer Technology and Markets, at Gartner.
"However, the other performance indicators of the Indian mobile market seem modest in comparison to those of markets such as China."
At USD 40, ARPU in India is among the lowest in the world and about one-third of that of China. India also lags behind China in mobile service penetration.
The mobile service penetration in India is currently at 51 percent and is expected to grow to 72 percent by 2016, whereas China already achieved 71 percent mobile penetration
in 2011 and is forecast to grow to 119 percent in 2016.
Mobile data revenue has tremendous growth opportunities in India due to low Internet penetration. While fixed broadband is becoming a norm in several countries, India is lagging behind even emerging markets in fixed broadband penetration.
India's fixed broadband household penetration was six percent in 2011, which is lower than the overall penetration in emerging markets (estimated at 16 percent in 2011).

While Indian mobile operators have demonstrated "out-of-the-box" thinking in IT and telecom infrastructure management to check operational costs, they have their work cut out to improve margins, by converting prepaid subscribers into postpaid, Gartner said.
With consumers perceiving mobile broadband as a basic necessity, mobile operators globally are reaping their investments in infrastructure through an increase in mobile data revenue.
However, in India mobile operators have significant challenges, given the pragmatic nature of the emerging middle class with regards to their IT products and services spending.
India could become the testing ground for innovative delivery and pricing models that could be replicated in other emerging markets. Mobile operators will need to focus on sound fundamentals such as improving the quality of service of mobile broadband.
"The industry is pegging its hope on market consolidation, which appears imminent in the aftermath of 2G licence cancellations. Department of Telecom and Telecom Regulatory Authority of India have a pivotal role to play in removing uncertainties in policy-making, and licence and spectrum management, so that the mobile operators can focus their energies on driving growth," Gartner said.