Sunday, September 23, 2012

Mobile Drives Revenue Growth; Broadband Drives Mobile

It has been obvious for some time that mobility and broadband are driving virtually all growth in the global telecom business. By International Telecommunications Union estimates, about $4.5 is earned, globally, for every $1 of fixed network revenue. And even if those ratios are higher in "developing" regions than in "developed" regions, the trend is clear even in those parts of the world with the most well developed communications infrastructure.

Both Verizon and AT&T, for example, earn a majority of their total revenue from wireless sources.

Insight Research Corp. has noted that wireless revenue will grow by 64 percent from current levels, while wireline revenues show only modest growth.

Nearly all of the growth in both sectors is expected to occur in broadband services, with wireless 3G and 4G broadband services projected to grow at a compounded rate of 24 percent over the forecast period and wireline broadband services projected to grow at a 13 percent compounded rate over the same forecast horizon.

Those trends are as evident in the Asia-Pacific region as elsewhere globally. Telecom service provider retail revenue in the Asia–Pacific region is predicted to grow at a compound annual growth rate of seven percent between 2011 and 2016, according to Analysys Mason. For the most part, that growth will be driven almost exclusively by mobile services.

Total telecom service revenue will grow by 29 percent from $229.7 billion in 2011 to $323.7 billion by 2016. But note the composition of revenue contributors. About 90 percent of the voice connections in the entire region will be mobile by 2016, up from 84 percent in 2011 and from 73 percent in 2008.

Overall, the number of voice connections in the region will increase by 45 percent, to 3.9 billion connections, with most of this growth coming from China and India.

Perhaps the most significant implication of the Analysys Mason forecast is that, over the next five years, the key drivers will be 3G and 4G services, which will account for 46 percent of mobile connections in the region by 2016 and the growing demand for Internet access, driving mobile broadband.

Mobile and fixed wireless will account for more than a 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.

Analysys Mason also predicts that active mobile penetration rates in the region will rise to 95 percent by 2016, a 32 percent increase over 2011 levels. 

The number of active SIMs will increase from 2.33 billion in 2011 to 3.7 billion by 2016 as well. 

In the last twelve months, 118 million mobile phones were sold across the seven key markets in the Southeast Asia region (Singapore, Malaysia, Thailand, Indonesia, Vietnam, Cambodia and the Philippines), representing $13.7 billion in device revenue, according to GfK Asia.

Some 10 million feature phones were purchased, about 12 percent more than a year ago. 

The rate of smart phone purchases increased by 78 percent across the seven countries. 

Though feature phones still are prevalent, smart phone sales are growing at rates between 42 percent and 326 percent, ” said Gerard Tan, GfK Asia account director. Indonesia is the region’s largest smart phone market, with smart phone sales growing 56 percent. 

In the Philippines, smart phone sales grew 326 percent. "Unlike the more developed countries like Singapore and Malaysia, smart phone sales in Thailand and Vietnam are still relatively low at 19 and 11 percent respectively.

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