Modest mobile growth in emerging markets

BOSTON, USA: The worst effects of the global recession may be over for mobile communications in emerging markets. Second quarter results from major operators in Asia, Africa, the Middle East and Eastern Europe show modest growth in subscriptions and usage, according to the recent report from Strategy Analytics, “Emerging Markets and the Financial Crisis at Midyear: Light in the Middle of the Tunnel.”

After three successive flat or declining quarters, average minutes of use (MOU) for a basket of 26 key operators climbed a respectable 5 percent in Q2 2009, a rate not seen since the same period in 2008. Total subscriptions rose 4 percent, continuing a recovering trend begun in the first quarter of the year.

“Don’'t open the champagne quite yet,” cautions Tom Elliott, director of the Emerging Markets Communications Strategies service and author of the report. “There is still a lot of potential weakness in these markets.” Handset sales remain well below the levels of a year ago, and many operators have been unable to convert growth in subscriptions and traffic into increased revenue.

Emerging market economies also remain highly dependent on conditions in the developed world; and the pace those recoveries can affect key factors like demand for commodity products, foreign aid and home-bound remittances from overseas workers.

Noting that the global crisis has debunked the myth that developed and developing economies have been decoupled, Harvey Cohen, President of Strategy Analytics, says: “Growth of communications activity is a good indicator of economic health, particularly at the so-called ‘bottom of the pyramid.’ If you don’t have the money you’re not going to buy that phone, or make that extra call.”