Friday, July 3, 2009

Asia Pacific drives global mobile revenue growth

UK: Ovum's latest Mobile forecasts to 2014 predict slower revenue growth for operators in the short term as the recession impacts.

However, connections continue to grow. The result will be downward pressure on ARPU, leading to an increasing need for network efficiency.

Global operator service revenues will breach $1 trillion and $290 billion in Asia-Pacific in 2011
Ovum previously predicted that global mobile services revenues would breach $1 trillion in 2010. Due to macro-economic conditions Ovum now expects this barrier to be broken in 2011.

The greatest impact of recessionary forces is seen in the short term. In Asia-Pacific, Ovum has revised its revenue growth forecasts for 2009 down to 8% from 10% in previously published figures. Yet, projected CAGR from 2008 to 2013 remains relatively stable at 6.6 percent.

“The recessionary impact on mobile in Asia, will be relatively muted, and led by China and India, mobile service revenue will continue to grow”, says Nathan Burley, Analyst at Ovum. “By 2014 Ovum expects total Asia-Pacific mobile operator service revenues to reach $326 billion.”

Voice will continue to be the largest revenue generator worldwide, accounting for 69% of revenues on a global basis and 66% in Asia-Pacific. As a result, voice will continue to be mobile’s ‘killer app’. Operators must not ignore this fact in the race for data revenues.

Emerging markets to continue their inexorable connections growth
By the end of 2014 Ovum forecasts 6.42 billion connections, up 59 percent from 2008, and a CAGR of 8 percent. Asia-Pacific will grow at 10 percent CAGR, with penetration reaching 78 percent, highlighting potential for further growth.

In developed markets (and some emerging markets), mobile penetration will well exceed 100%, but further growth will still be possible from multiple SIM ownership and through uptake of data-centric devices. As such, population penetration is ceasing to be a useful indicator.

China and India will dominate connections and will account for 30 percent of total worldwide connections by 2014. However, the countries’ penetration rates will be just 76 percent and 69 percent, respectively, by 2014. Massive population growth will continue to fuel mobile demand as new, unconnected users join the market.

The enormous growth in connections has financial implications for Asia-Pacific mobile operators as they are expected to grow by 80 percent from 2008 to 2014, while revenues grow by 40 percent. Furthermore, Asia-Pacific mobile outgoing minutes of usage are set to rise 155% between 2008 and 2014, but voice revenues will rise just 26 percent.

“Both comparisons highlight the influx of ever-lower ARPU customers from emerging markets and price erosion in mature markets, even for data services. Therefore, efficient networks, enabling competitive pricing, will be critical in both highly saturated mature markets and low-ARPU emerging markets”, explains Steven Hartley, Senior Analyst.

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