Wednesday, 19 September 2012 10:20

Emerging APAC a $100 billion telco market

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Analysts Analysys Mason have released a major new report which shows total growth in emerging Asia Pacific telecoms markets of $US84 billion over the next five years. The report covers Bangladesh, China, India, Indonesia, Malaysia, Pakistan and Thailand.

Telecoms retail revenue in the region is predicted to grow at a compound annual growth rate (CAGR) of 7% between 2011 and 2016, according to a new report from Analysys Mason. Total telecoms service revenue will grow by 29% from US$229.7 billion in 2011 to US$323.7 billion by 2016.

Retail telecoms revenue from all services other than fixed voice is predicted to grow between 2011 and 2016, led by mobile handset data revenue, which will grow at a CAGR of more than 20%.

The key trends driving growth in telecoms revenue and the number of connections in the next five years will be:

  • the roll-out of 3G and 4G services, which will account for 46% of mobile connections in the region by 2016
  • the growing demand for Internet access, leading to widespread take-up of smartphones and mobile broadband
  • improved broadband coverage and connectivity, as a result of greater network coverage and higher international bandwidt

The research report, “The emerging Asia-Pacific telecoms market: trends and forecasts 2011-2016”, provides fixed and mobile subscriber and revenue forecasts for more than 60 KPIs relating to voice and data services, and discusses drivers and challenges for telecoms growth in this region of 3.7 billion people.

The analysis includes country-level forecasts for the major markets of Bangladesh, China, India, Indonesia, Malaysia, Pakistan and Thailand. China and India together account for 68% of the region’s population, 64% of its active mobile SIMs and 75% of its total retail telecoms revenue. The latter is heavily skewed towards China, where overall telecoms revenue will grow from US$138 billion in 2011 to US$194 billion in 2016.

Analysys Mason predicts that active mobile penetration rates in the region will rise to 95% by 2016, a 32% increase on 2011 levels. The number of active SIMs will increase from 2.33 billion in 2011 to 3.7 billion by 2016. “As mobile penetration approaches 100%, operators in the region will look to rural areas, and opportunities to provide customers with more than one SIM, in order to maintain growth in subscriber numbers, while developing more sophisticated strategies to drive mobile data revenue and encourage retention within a largely prepaid subscriber base,” says Alexandra Rehak, co-author of the report.

3G will become the dominant mobile technology in the emerging APAC region during the forecast period. By 2016, 41% of active SIMs in the region will be 3G, compared with just 11% in 2011. LTE will have limited impact during the forecast period, because of constraints around device availability and affordability, and delays in rolling out LTE relating to spectrum auction timings and operator capex constraints.

Even by 2016, vendors cannot expect LTE devices to account for more than 5% of the active SIM base in the region. Penetration will be slightly higher in China and Malaysia, at 7% and 8% respectively, slightly lower in India, Indonesia and Thailand (3%), and even lower in Bangladesh and Pakistan.

The voice market in the region will continue to be heavily dominated by mobile during the forecast period, with 90% of the voice connections being mobile by 2016, up from 84% in 2011 and from 73% in 2008. Overall, the number of voice connections in the region will increase by 45%, to 3.9 billion connections, with most of this growth coming from China and India.

As in other regions, mobile ARPU in emerging APAC markets has declined significantly in recent years, from a regional average of USD10 per month in 2008 to USD7.40 in 2011 (although this varies significantly from country to country). The decline is a consequence of decreasing tariffs across the region, the extension of services to lower-income users who spend less on telecoms than established subscribers, and the increasing numbers of subscribers who have more than one SIM.

The regional decline in mobile ARPU will continue to 2016, but at a slower pace than during 2008–2011, because increased spending on non-voice services will somewhat mitigate the effects that have driven the decline to date. Mobile ARPU across emerging APAC markets will average US$6.5 by 2016.

The report also argues that broadband services in the region will become more diverse, as wireless technologies reach new areas and fibre is rolled out in cities. Mobile and fixed wireless will account for more than one-third of broadband connections in the emerging APAC region in 2016 – and for the vast majority of connections in rural areas where fixed-line infrastructure is unavailable. “Broadband will become an increasingly important revenue source for both fixed and mobile operators, as its availability becomes more widespread and the demand for data services continues to grow,” says Rehak.

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire. He is one of Australia’s longest serving and most experienced IT journalists. He is author of the only definitive history of the Australian IT industry, ‘A Vision Splendid: The History of Australian Computing.’

He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time weekly IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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