India had 109.7 million rural mobile subscribers at the end of the first quarter, up by 18 percent from 93.2 million users in the fourth quarter of last year, the country's telecom regulator said on Monday.
The country's 282 million urban wireless subscribers accounted for 72 percent of all mobile users at the end of the first quarter, the Telecom Regulatory Authority of India (TRAI) said.
Indian mobile services companies and handset vendors have identified the rural market as a new growth opportunity, as urban markets are getting saturated.
Nokia, for example, launched its Life Tools service in June, after a pilot project in the Indian state of Maharashtra. The service offers agriculture information, education, and entertainment targeted at people in both rural areas and small towns.
The rural market is however likely to be low margin business, Kamlesh Bhatia, a principal research analyst at Gartner, said on Friday.
The number of mobile subscribers in the country is on the upswing with demand both from rural and urban markets.
The number of subscribers for mobile services across the country has increased to 391.76 million in the quarter ended March this year, up by 50 percent from 261 million in the same quarter last year, according to TRAI data.
However competition and tariff cuts have brought down the average revenue per user, S.K. Gupta, advisor at TRAI, said on Tuesday. ARPU has been going down in India since 2003.
Indian mobile service providers are focusing on value added services, including applications to boost revenue, Gartner's Bhatia said.
A number of foreign mobile service providers have invested in joint ventures in India, including Vodafone and NTT DoCoMo.
Tata Teleservices, which has NTT DoCoMo as an investor, has begun rolling out services across India under the Tata DoCoMo brand. NTT DoCoMo said it plans to progressively bring to India new services such as its i-mode wireless Internet service, location-based services, and mobile payment.