2009 Asian Mobile Voice Market

This Asia market publication covers 35 countries in North, South, South East and Central Asia. The theme of the report is mobile deployment and development, particularly focusing on voice application for mobile use.

Mobile markets in Asia have continued experiencing rapid growth during 2009, despite many countries close to or over the 90% penetration mark. This has resulted in the Asia region being home to the fastest growing telecommunications markets in the world. Excluding the highly penetrated markets, growth has been in excess of 20% across the remaining markets, with average annual growth being well over the 30% mark. This is particularly relevant in India and China where monthly net additions are regularly in excess of the 10 million subscriber mark. These two countries alone account for over 22% and 35% overall market share in the Asia-Pacific region respectively; or a massive 57% combined

There is still room for substantial growth. Markets with large populations and relatively low penetration rates, such as India, China, Philippines, Pakistan, Vietnam and Indonesia, will continue to grow at a rapid rate. In the more mature markets such as Japan, Taiwan and South Korea, mobile numbers will rise less than 5%. Growth is being driven by various factors, including government investment to drive the economy; infrastructure building after years of neglect or fixing the after-effects in war torn countries, and also major foreign investment.

In the developing economies quick and easy mobile uptake is the preferred, and often only, option for subscribers, exacerbated by low fixed-line deployments. These countries also offer investors the promise of continued growth of the mobile infrastructure and subscriber numbers. While subscriber growth and market share is important in the developing economies, there comes a point where the venture must result in profits.

Operators still face the huge challenge of trying to prevent ARPU slide as mobile services spread to poorer parts of the population. To an extent, a large customer base will help to offset low spend but it is also hoped that new non-voice services will help to drive revenue. Operators are developing mobile services such as mobile banking, remittance payments, and mobile health services that take advantage of a lack of access by the poor to social infrastructure such as banks and hospitals.

China

In the past five years, as one of the country’s ‘pillar industry’, China’s telecom service industry has grown at a faster rate than the country’s GDP. Revenue from basic telecom service contributes approximately 2.1% of the country’s GDP, while value added telecom services contribute a further 3.2% to total GDP. China continues to extend its lead as the single largest mobile market in the world. The vast majority of services are GSM – China is the largest GSM market in the world – though China Telecom’s CDMA service is the second largest in the world.

By mid-2009, the number of mobile phone users reached over 670 million and mobile penetration was at 50.6%. The robust growth was due to an expanding rural market and the increasing number of people who have acquired more than one mobile phone. With many of the more prosperous eastern Chinese cities saturated, rural areas are the new target. However, this massive push into China’s rural areas has meant that ARPU is being squeezed. Both China Mobile and China Unicom have been grappling with a steady decline in the average revenue earned from new users. As in other markets around the world, this trend has been fuelled by the growing popularity of prepaid cards instead of the more lucrative postpaid subscriber contracts.

Consumers in China increasingly view fixed-line service as impractical, opting instead to use only mobile phones. China Mobile succeeded in attracting new customers away from fixed line operators China Telecom and China Netcom after a calling-party-pays system was implemented nationwide in 2007. The company also ramped up new service offerings such as mobile newspapers. The one-way charging also accelerated the substitution of fixed-line services by mobile networks.

In 2008 China added nearly 25 million subscribers per quarter with China Mobile accounting for over 70% share of the market. Although the 3G licenses had still not been issued, this did not stop the uptake of the Internet on mobile phones which, by end-2008, accounted for 73 million of China’s 298 million web users.

The long awaited 3G licences were finally awarded in late 2008 and by mid-2009 all three operators were aggressively building out their networks in over 340 cities across China. China Mobile was saddled with TD-SCDMA technology and already subscriber forecasts have been reduced as the operator struggles to sign up 3G users. China Unicom with its WCDMA licence and China Telecom with its CDMA2000 licence are expected to the fierce competitors in the bid to boost falling ARPU figures.

Hong Kong

Hong Kong’s mobile market has some of the cheapest tariffs in the world amidst a highly competitive environment. This is one of the reasons why it is has such a high penetration rate. An ongoing price war has cut mobile phone air-time rates to levels where operators have become increasingly reliant on provision of non-voice value-added services to maintain margins. This, in turn, has made 2.5G and 3G services of considerable importance to the operators. By mid-2009, total mobile subscribers were over 11.5 million including over 3.0 million 3G subscribers.

India

India’s mobile market finished the 2007 year strongly with over 233 million subscribers in the sector - according to the telecom regulator’s figures which cover GSM, CDMA and WLL. Twelve months later there were 330 million mobile subscribers in India, a more than 40% jump in the year. The growth continued into 2009 and by mid-year there were 415 million subscribers with growth running at more than 50%. India’s mobile operators have been attracting new customers with call rates as low as US$0.01 a minute and by offering cheap handsets. While offering some of the lowest mobile tariffs in the world, the market also had the highest usage in the world with the average customer typically using 500 minutes per month.

Indonesia

Half way through 2009 around 140 million of Indonesia’s 235 million population had a mobile phone, still presenting room for more growth over the coming years. The market was expanding at an annual growth rate of about 30%. In a country where GDP per capita was running at below US$2000, the market has boomed on the back of cheaper tariffs and handset prices. At the same time, not surprisingly, ARPU was falling; this was obviously being offset by the increasing subscriber base and upturn in non-voice revenue with the arrival of 3G. By June 2009 there were already around 10 million 3G subscribers in the Indonesian market.

Vietnam

After a slow start by general standards, Vietnam’s mobile market has been developing at a rapid pace. For a number of years it has been growing at an annual rate of between 50% and 100% per year. This pattern was continuing through 2009, with growth running at more than 70% mid-year in what was a highly competitive market. It became even more competitive in July 2009 with the arrival of the VimpelCom-backed GTEL-Mobile. This saw the number of operators in Vietnam increase from six to seven. Penetration was 100% at the time.

Asia – mobile subscribers, annual change ranked by penetration rate – June 2009

(Source: BuddeComm based on Global Mobile data)

Note: ¹December 2008

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