2011 Asia - Telecom Forecasts

No stopping mobile subscriber growth and internet connectivity

The report provides a series of what BuddeComm terms scenario forecasts. By describing long-range scenarios we identify a band within which we expect subscriber growth to occur. The associated text describes what we see as the most likely growth trend within the identified band. The actual forecasts are summarised in a series of tables.

Our scenario forecasting methodology applies our own historical information, together with telecommunications sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data. All statistics for GDP, revenue, etc are quoted in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.

A set of sample tables are presented below, these being the actual scenario forecasts for Vietnam. The upper and lower scenarios forecasts are for the years 2015 and 2020.

Vietnam – Forecast fixed line subscribers – 2015; 2020

(Source: BuddeComm, forecasts)

Vietnam – Forecast Internet subscribers – 2015; 2020

(Source: BuddeComm, forecasts)

Vietnam – Forecast mobile subscribers – 2015; 2020

(Source: BuddeComm, forecasts)

Background notes to market forecasts

Mobile markets in Asia have continued experiencing strong growth during 2010. A total of more than 2.6 billion mobile subscribers in early 2011 and an average annual growth of over 25% (excluding the most highly penetrated markets) have combined to see the Asia region with the fastest growing telecommunications markets in the world. With difficult economic conditions and some markets saturating it is not surprising that the growth rate has slowed somewhat over the last year or so. This is after a period where annual mobile subscriber growth rates in Asia had been well in excess of 50%. Overall regional penetration had reached an estimated 65% by end-2010, suggesting that there was still more room for subscriber growth across the region. Coming into 2011 there were more than 12 countries in Asia with mobile penetration levels in excess of 100%. Not surprisingly, the global financial crisis had caused some caution in mobile markets across the region for a while, mainly in 2009; after a pause the momentum has quickly begun to pick up again.

Particularly relevant in the context of rapidly growing markets that still have some further room for expansion are India and China where monthly net additions have regularly been close to 10 million subscribers. These two countries combined account for around 60% of overall market share in the Asia-Pacific region. There is still room for substantial growth throughout the region and we can expect markets with large populations and relatively low penetration rates such as India, China, Philippines, Pakistan and Indonesia will continue to grow at a healthy pace. Growth is being driven by various factors, including government investment to drive the economy; infrastructure building or fixing the after-effects of war as well as major foreign investment projects.

In terms of growth rates, not surprisingly it is the smaller and generally less-developed markets that have been expanding rapidly. More recently, the rate of growth has clearly been much cooler than back in 2007, however; in that year there were seven countries in Asia with annual growth rates in excess of 90%. By 2010 there were no markets with growth rates in excess of 100% (North Korea came in at around 96%). In the developing economies, quick and easy mobile uptake has for a long time been the preferred, and often the only, option for subscribers, given the low levels of fixed-line deployments. In order to prevent ARPU slide in these markets, operators are offering value added mobile services such as mobile banking, remittance payments and mobile health services that take advantage of lack of access by the poor to social infrastructure such as banks and hospitals.

Market competition has driven handset prices and airtime tariffs downward, thus opening up mobile services to wider adoption. The rate of adoption of wireless Internet has started to rise with the overall increase in mobile penetration together with networks being progressively upgraded to next generation platforms. While 3G licensing and the ongoing launch of 3G services in Asia has certainly been promoting the growth of wireless data services, 3G has also been providing opportunities for both wireless access and content providers in domestic markets. In South Asia, in particular, more people own a mobile phone than a PC, giving the delivery of mobile data services huge potential there.

The growth of mobile Internet across Asia is being largely driven by competition in the market place and has been boosted by the advent of 3G+ services. Market competition has been driving handset prices and airtime tariffs downward, thus opening up mobile services to wider adoption. The rate of adoption of wireless Internet was expected to rise with the overall increase in mobile penetration and as networks are upgraded. LTE is also rolling out in the more mature markets such as Japan which already has close to 100% 3G penetration.

Asia makes a strong claim to be leading the world when it comes to the development of broadband Internet. In fact, after the mobile market, broadband has been the fastest growing telecom market segment in Asia. The energetic expansion of broadband has been more of a phenomenon in the developed economies, with narrowband access continuing to be the norm in most of the poorer developing countries of the region. This is changing, however. With DSL dominating the world market, Asia has become the leading region with about 35% of the global DSL subscribers. More recently, we have seen FttX as an alternative platform for broadband access in Asia. In the leading technology markets of Japan and South Korea and Taiwan in 2011, FttX has been displacing other forms of high speed Internet access. Asia accounts for around 85% of global FttX subscriptions and China dominates the lead with over 30 million subscribers.

Although there are broad market commonalities, there are trends that are specific to each country in Asia Pacific depending on the level of technology adoption and the presence of government intervention and competition.

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