In four years, India will leapfrog the US mobile market

The GSM Association (GSMA) announced today that India will become the second-largest mobile broadband market in the world, with 367 million mobile broadband connections by 2016 on current estimates.

Mobile growth in India is still mostly in the cities.

In doing so, India will overtake the U.S. – but not China, which is estimated to reach 639 million connections in the same period.

The GSMA and its members are using this finding to lobby for additional spectrum from the Indian government. 

“The mobile industry in India is set for immense growth” said GSMA director general Anne Bouverot, “but there is scope for far greater development.To take full advantage of this, the Indian government should facilitate the timely release of additional spectrum in a fair and transparent way for all stakeholders.”

Bharti Airtel and Vodafone India (VODquote) have also released statements supporting the GSMA’s push for more spectrum.

According to Bouverot, a 10% increase in mobile broadband penetration could contribute as much as $80 billion in revenue across India’s transport, health care and education sectors by 2015.

Mobile growth in still largely an urban phenomenon. Net additions in urban areas were 85 million in 2011, compared to 57 million in rural areas, even though India’s rural population outnumbers its urban population by more than two to one.

According to the GSMA and its partner Wireless Intelligence, cost is the limiting factor — an LTE smartphone has an average price of $500, four times India’s average monthly GDP per capita.

Investors looking to profit from the growth of Indian telecom should keep an eye on the companies that are most successful in lowering prices and obtaining more spectrum. Likely winners include Vodafone, Nokia (NOKquote), which led the Indian handset market in 2011, and Bharti Airtel, which is out to lower smartphone prices.

Bharti Airtel does not trade in the United States, but the Emerging Global Shares Indxx India Infrastructure Index ETF (INXXquote) has Bharti as its the biggest holding.