But the Internet fever is spreading… The number of Chinese online increased by about one-third during 2006, to 132 million people. Overall, China’s online population has increased 486% since 2000.

But that’s nothing compared with India.

India’s online growth rate is staggering. The country’s Internet population has grown 700% since 2000. And there’s still plenty of room for it to expand. Let’s look at the numbers…

More than 1.1 billion people live in India. But only 40 million are online — that’s a mere 3.5% of the total population. In mature Asian Internet markets, such as Hong Kong, Japan and South Korea, there is a saturation rate of about 68%. Even if India reaches only 50% saturation over the next several years, this will mean more than 500 million new Internet customers.

Compare this with the 210 million Internet users in the U.S. and you can see the gigantic potential.

Until recently, the Indian telecom industry was controlled by the government. This led to the services being generally inferior to those in other countries. And it is now in the infancy of expanding and updating these communications.

So the government is helping things along by reducing barriers for telecom providers. Cheaper computers are also on their way. India’s IT and Telecom Ministry is heading an initiative to cut the cost of PCs, which would help more of India’s emerging middle class find their way to the Web. According to the Internet & Mobile Association of India (IAMAI), the initiative is set to make computers available for less than 10,000 rupees — or $226.

Internet access in India is surprisingly affordable, as well. According to the IAMAI, a monthly broadband subscription can cost as little as 199 rupees ($4.50).

Also, we’re seeing tons of new local content being created, specifically Web site registrations under the “.in” domain. According to the IAMAI, these registrations have surpassed 150,000.

These factors will lead to millions of new Internet connections over the next several years. And more Indians will be searching the Web for locally relevant content.

The potential here is enormous. Take Japan for instance. Its market penetration is around 67%, but during its growth period huge money was being made. Take a look at this chart:

This shows the revenue growth of Japan’s largest ISP, Nifty Corp, during its breakout growth period in the 1990s. This pattern could soon be duplicated by one or more Indian ISP(s).

And now, we’ve found the perfect company that’s ready to profit from the information age’s advance on the Indian subcontinent.

This company has been the pioneer of computer network and ISP companies in India. It was the first independent company to offer dial-up connections when the market was deregulated in 1998. And it was the first Indian Internet company to be listed on the NASDAQ National Market in the U.S.

Their business model is simple. They believe that the growth of the Internet in India has been held back by high costs and poor user experiences caused by inadequate infrastructure and slow network connections. They intend to change all that.

The company has invaded the Indian market in four main sectors: Dial-up and broadband Internet services, local content on numerous Web portals, corporate networking services and the largest franchised network of computer cafes on the subcontinent.

And once the ball gets rolling, this revolution stands to show investors serious gains…

Best,
Greg Guenthner
August 27, 2007

P.S.: I hate to leave you without the name of this company, but it would just be unfair to our Penny Stock Fortunes readers if I told you. Now…if you are interested, this company is still in our buy-up-to range, and you still have a chance to act.

The Indian Internet Industry was originally featured in the Penny Sleuth.