Total earnings of cellular services market in 2006 was 8.95 billion dollars and would reach 25.617 billion by 2011 growing at a compounded annual growth rate (CAGR) of 18.4 per cent, Gartner said on Wednesday.

Cellular market penetration is also projected to increase from 12.7 per cent in 2006 to 38.6 per cent in 2011.

This overall penetration will primarily be driven by an increased focus on the rural market. By 2011, Gartner expects 58 per cent of the rural population and 95 per cent of the urban population to be covered with mobile connections.

"With more marginal users forming the bulk of the addressable market, low service costs and inexpensive handsets will help to unlock the inertia and facilitate adoption of mobile services," Gartner senior research analyst Madhusudan Gupta said.

The growth, however, would be restrained because of the problems regarding allocation of scarce spectrum. This could have an impact on expansion plans and the quality of service because of inadequate investment in or upgrading of networks.

Indicating that there was still scope for reducing mobile tariff, Gupta said although call rates have reduced to about 2.6 cents per minute, it remained high compared with fixed line rates at 0.9 cents per minute.

The rural market presents immense growth opportunities as mobile penetration was just two per cent. Many companies are planning to tap this market by introducing handsets that would cost below Rs 1,000, Gartner said.

However, revenue per user would decline for operators as customers with low disposable income will form a significant proportion of the base. As a result, average revenue per user (ARPU) per year would fall to 59.5 dollars in 2011 from 82.1 dollars in 2006.

Gartner said the growth would be led by pre-paid segment, where the market is forecast to grow 23 per cent CAGR to more than 46.2 crore connections by 2011. Pre-paid connections accounted for more than 84 per cent of the total market in 2006 and expected to grow to more than 93 per cent by 2011.

Pre-paid subscribers are expected to adopt data services faster than the post-paid segment. Data revenues for the pre-paid segment are projected to grow at 46 per cent CAGR during the forecast period as compared to 22 per cent for post-paid subscribers during the same period.

Bulk of the revenues will continue to come from voice services. However, with the increased growth in data services, the percentage of revenues coming from voice will reduce from 90 percent in 2006 to almost 78 percent in 2011.

Data revenues will outpace growth of voice revenues and contribute 22 per cent of revenue in 2011 from 9.6 per cent in 2006, it said, adding India will continue to be the fastest growing country in Asia Pacific in terms of mobile telephony after China and promises to become more dynamic with the entry of Britain's Vodafone.