2007 South East Asian - Telecoms Statistics and Market Overview

This Asia market annual report covers 11 economies in the South East Asia sub-region. It takes an overall look at the various telecoms markets, together with a particular look at the telecom statistics which describe the market in each of the countries.

The South East Asian countries covered include: Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Timor Leste, and Vietnam.

Through 2006 and into 2007, we have continued to see a generally strong run of economic growth throughout the Asian region. In terms of economic power the economies of North Asia are have been dominating the region. At the same time, the giant growth engine that is China has continued to provide a sustained lift to the economies of its regional neighbours. This is especially true for the economies of South East Asia. However, if China’s economy starts showing signs of stalling, the impact will certainly be felt right across the region.

In looking at the telecommunications market in particular, again it is impossible to ignore the impact of China on the rest of Asia. With its huge population and strongly developing economy, it is a real presence across the region. Not only does it have the biggest mobile, fixed and Internet markets in the world; we are witnessing the aggressive push of Chinese equipment manufacturers into the Asia market, with these suppliers having a major impact on markets such as South East Asia. Especially in the developing countries of the sub-region, China has been supporting generous supplier credit arrangements as part of supply contracts, working to build equipment market share.

Into 2007, while the big new drivers in the wider Asian market were broadband and IP services, the majority of the countries of South East Asia were continuing to put the emphasis on basic mobile, fixed and fixed wireless networks, ensuring that their networks are built up sufficiently to provide comprehensive national coverage. For the moment, with a few exceptions, there has not been any rush in South East Asia to get into Next Generation Networks, triple play services and the various convergent strategies. There is no doubt, however, that when the time comes the markets across South East Asia will move quickly on this front.

Highlights of the individual South East Asian markets include:

Brunei

Brunei has made of the most of its size (small) and wealth to ensure that it was delivering some of the most up to date telecommunications services in South East Asia to its population. The target of 100% digitalisation was achieved way back in 1995. Telecommunications throughout Brunei are of a high standard and the country ranks well in Asia in both infrastructure and penetration. With considerable encouragement from the government, it is not surprising then that people in Brunei are strong consumers of telecommunications services. Nevertheless, the country must further restructure and generally liberalise the local telecom industry. For the moment things appear to have seriously stalled on this front. The local market continues to be dominated by the incumbent Jabatan Telekom Brunei (JTB), still a division within the Ministry of Communications. For the country overview, see chapter 2, page 5.

Cambodia

Cambodia’s efforts have been increasingly directed towards building up its telecommunications infrastructure. Having struggled with the legacy resulting from years of civil war and instability, the country has made some progress in improving its administration and its government institutions. Not surprisingly, the telecom sector remains in need of serious regulatory reform and a general strengthening of the regulatory role. Some effort has gone into building infrastructure, but this has been mainly to support a booming mobile market. With almost one million mobile subscribers in early 2007, penetration was just over 13%. By contrast, fixed-line services were continuing to languish at less than 40,000 subscribers. For the country overview, see chapter 3, page 10.

Indonesia

Despite the occasional setback, Indonesia continues to see its telecom sector grow in an energetic manner. A country of more than 220 million people, Indonesia has some particularly big challenges to confront in building the necessary telecommunications infrastructure to cover its uniquely complex geography. It must also deal with a range of social, political and economic issues. Having rebounded reasonably well from the economic crisis of the late 1990s, the government took its time to reshape the telecom industry. Eventually, however, much healthier growth in both subscriber numbers and in revenues has been the result. Indonesia’s fixed-line teledensity has remained disconcertingly low (less than 7% in early 2007); at the same time, the rapid roll-out of Wireless Local Loop services has been providing a promising boost to teledensity. The country has a very active mobile market, which was growing at a rate of close to 60% in 2007; the subscriber base had reached almost 75 million (penetration 33%). The government has already issued 3G mobile licences to five operators. For the country overview, see chapter 4, page 14.

Laos

After years of struggling to build up its economic base, Laos has finally found some good news in the form of the giant Nam Theun 2 hydro project, the Oxiana gold and copper mine at Sepon and a number of other significant mining ventures. The challenge in 2007 and beyond is for Laos to find some economic equilibrium, allowing it to focus more attention on building its national infrastructure, including telecommunications. With a low fixed line teledensity of less than three telephones per 100 people by early 2007, the country has been looking for more foreign investment to boost the telecoms sector. Despite the recent rapid opening up of the market, which has certainly provided a major lift to the country’s mobile market (40% annual growth in subscribers), the regulatory progress continues to lag behind market development and has the potential to derail the progress already made if reform is not speeded up. For the country overview, see chapter 5, page 44.

Malaysia

Malaysia has been quietly working away in recent years at positioning itself as a technologically progressive economy. To this end it has built one of the more advanced telecom networks in the developing world. While still in the process of expanding, the country’s telecom sector has undergone a period of consolidation with telecom companies doing battle in an increasingly competitive and changing market. The last decade has seen positive growth in the Malaysia’s telecom sector. The mobile market saw penetration pass the 85% mark in the first half of 2007, subscriber numbers reaching 21 million by then. In the meantime, the government has issued a number of WiMAX licences to non-telcos, in a move that created great interest within the industry. Fixed-line services were sitting at 4.3 million (around 17% penetration) by the start of 2007. For the country overview, see chapter 6, page 50.

Myanmar's

Myanmar’s telecoms sector continues to be dominated by the state-owned monopoly telephone service provider, Myanmar Posts and Telecommunications (MPT). The country is battling both grave economic problems and a troubled political climate. Pro-democracy protests in the second half of 2007 triggered a harsh response from the ruling military regime. Soaring inflation continues to be a major problem, with the country’s centrally planned economy plagued by weak fiscal and monetary management. Not surprisingly, such problems have frightened off many potential foreign investors. In the telecom sector, accurate subscriber figures are hard to obtain; the fixed telephone line penetration remains somewhere around 1%; mobile subscribers number about 330,000 (less than 1% penetration); Internet services are virtually non-existent. And the military junta can shut down all of this whenever it likes. For the country overview, see chapter 7, page 70.

The Philippines

Over the last decade or so, there has been a concerted effort by the government in the Philippines, working with the country’s telecom operators, to expand the national fixed network. Despite this, the country has been finding it difficult to extend its basic telephone network to reach the wider population. Fixed-line teledensity stands at less than 5%. (A fixed-line teledensity of 12% by 2002 was the target set for the government’s Service Area Scheme.) By contrast, the country’s mobile penetration had passed 50% by early 2007 and was continuing to grow at an annual rate of 26%. There is considerable ongoing optimism in the Philippine telecom market as the sector has been contributing over 10% to the country’s GDP, boosted considerably by its mobile segment. For the country overview, see chapter 8, page 75.

Singapore

Singapore has built a high quality and progressively regulated telecommunications environment that has, in turn, generated a very competitive market. The country continues to maintain its status as a world leader in telecoms and certainly maintains a positive outlook for its local telecoms sector. All restrictions on direct and indirect foreign ownership within the telecom sector have been lifted. In this progressive market, over 98% of homes have fixed-line telephone connections. Singapore was one of the first countries in the world to have a fully digital telephone network. Although incumbent Singapore Telecommunications (SingTel) continues to play a major role in the Singapore telecom sector, liberalisation has seen a host of new operators entering the market, helping exploit the opportunities provided by competition. In a major strategic move, with strong competition in its domestic market, SingTel took the decision to expand offshore and has successfully established a considerable presence in regional markets, including the ownership of Optus, the second ranked mobile operator in Australia. For the country overview, see chapter 9, page 107.

Thailand

Thailand’s telecom sector has been displaying a lot of energy, despite some economic uncertainty and questions about the government’s progress on a range of national projects. Over the last four or five years, the country’s mobile telephone market in particular recorded strong annual growth rates. By early 2007, mobile penetration was around 67% and the annual subscriber growth rate had lifted again to 35%. The country has certainly been seeing the benefits of a liberalised market. A feature of the government’s telecom reform efforts had been a general tardiness in implementing key changes. The National Telecommunications Commission (NTC) finally came into being in late 2004. The NTC began its task energetically and there were promising signs of major reforms being implemented. However, momentum was lost when a military coup overthrew Thaksin Shinawatra’s government in September 2006. Uncertainty over the administration of the telecom sector and the national reform program was continuing into the second half of 2007. For the country overview, see chapter 10, page 135.

Timor Leste

The tiny fledgling nation of Timor Leste (East Timor) saw a newly established Ministry of Transport, Communication & Public Works (MTCPW) select Portugal Telecom to be the lead partner in a consortium to operate Timor Telecom in 2002. The operator has gone about the task of re-building the country’s infrastructure and, following on from the work Australia’s Telstra did under the earlier transitional administration, Timor Telecom has some success in this regard. With Timor Telecom’s strong monopoly position, it is no surprise that the country has very high tariffs for most telecom-related services. For the country overview, see chapter 11, page 171.

Vietnam

Reflecting the self-conscious style of a centrally-planned economy, Vietnam set itself some ambitious targets for the expansion of its telecommunications infrastructure. Initial efforts to fast-track the expansion of the national network had their shortcomings. But the introduction of a limited level of competition into the telecoms market, combined with a generally improved economic climate, has seen some vigorous growth in the sector. In an important move, Vietnam won accession to the World Trade Organization in early 2007, adding to a growing positive climate for the telecom sector. Increased foreign investment remained the key to expansion. While the continuing strong government involvement in the telecom sector has raised major questions about its commitment to deregulation and liberalisation, there is much interest in the administration’s program for the ‘equitisation’ of telecom operators. For the country overview, see chapter 12, page 174.

Data in this report is the latest available at the time of preparation and may not be for the current year.