The Indian government said on Wednesday that it has decided to allow MVNOs (Mobile Virtual Network Operators) to offer mobile services in the country, accepting the recommendations in August by the country's telecommunications regulator.
The MVNOs' entry into the Indian mobile market is expected to increase competition and lower prices for customers, analysts said.
Detailed guidelines for MVNOs will be issued by the country's Department of Telecommunications (DoT) after it receives responses from the Telecom Regulatory Authority of India (TRAI) on some issues, the government said.
MVNOs rent rather than own the radio spectrum or the infrastructure required to provide the service.
The MVNO is a natural progression toward enhancing free-market principles and contributing to the efficient use of existing telecom infrastructure, said TRAI in a report last year to the DoT.
The government's decision to allow MVNOs is likely to help operators like Virgin Mobile set up direct operations in India. Virgin has a revenue-sharing agreement with another telecommunications services company, Tata Teleservices, for the use of the Virgin Mobile brand.
India added a record 15.4 million new mobile users in January, taking the total subscriber base to 362 million, according to data released last week by TRAI.