Pyramid Research Predicts 10 Telecom Trends in the Asia-Pacific Region

(Business News & Technology News, 27 Jul 2007)

Leading global telecommunications intelligence firm Pyramid Research, at its second annual Asia-Pacific Telecom Summit, presented 10 key trends that will take place in the Asia-Pacific telecom sector in 2008.

Senior Analyst Marc Einstein presented the following 10 critical developments in the Asia-Pacific region for 2008:

1. Subscriber growth
Indonesia's broadband market will have the highest growth rate in Asia at 45 percent per year for the next five years, leading the region's subscriber growth. China, India, Indonesia, and Pakistan will hold 80 percent of Asia's mobile subscribers in 2012, when regional subscriptions total 2.2 billion. Expect higher churn, less revenue, and consolidation in 2008 in developed markets. Low ARPUs will facilitate a transition to IMS.

2. Mobile data
Asia-Pacific mobile data revenues will almost triple over the next five years to $110 billion, but increased broadband penetration and flat-rate plans will create significant threats to this growth. The mobile data market will grow, but the spending per user will start to decrease as broadband becomes more available in emerging markets.

3. Mobile advertising
Competition from free advertising models will serve as a litmus test for future business models in the region.

4. WiMAX
The scale of WiMAX deployment remains elusive in the region. Market activities in the US, Japan, and Korea will determine the ultimate role the technology will play in the pre-4G environment.

5. IPTV
Despite healthy take-up of IPTV in markets such as Hong Kong, Western Europe, and Korea, profitability with remain elusive. For established operators like PCCW and Telef¨®nica, 2008 will be a crucial year.

6. Handset devices
China, India, and parts of Southeast Asia will be the few remaining markets driven by organic handset device growth in the Asia-Pacific region. Expect higher churn, less revenue, and consolidation in 2008 in developed markets.

7. Capital expenditures
Capex by the top 15 global mobile network operators will reach $71 billion in 2007 and gradually decrease by 2 percent per year. Like the number of mobile subscribers, Capex has peaked in most markets. Despite high profitability, emerging market operators must further reduce capex and opex spending as ARPUs dip below $5. Vendors will rely less on large legacy accounts and increasingly look to markets like India, Indonesia, and Bangladesh.

8. Mergers and acquisitions
M&A opportunities will be limited in the region, and multiple bidders will drive up prices quickly. While diversification is important, beware of overbidding and regulatory issues in emerging markets.

9. Convergence
Convergence will be a driver of merger and acquisition activities. The entrance of telecom operators into the convergence space, however, has driven up the price of content, and expensive content can quickly ruin margins.

10. Mobile virtual network operators
Despite some major failures in the MVNO space, Pyramid Research still sees a niche for the business model. Above all, consumers are price-sensitive, and handsets are crucial. Pyramid Research predicts global MVNO subscribers to reach 129 million by 2011.

Pyramid Research