MELBOURNE, AUSTRALIA: Hong Kong is one of the most competitive and mature telecoms markets in the world. Although Hong Kong operators have traditionally received more revenues from post-paid services, prepaid is becoming increasingly important as competition increases and subscribers become more stringent on communication expenses.
Ovum forecasts that the prepaid ratio of total mobile connections in Hong Kong will grow slowly to 48.1 percent in 2010. It will then decline slowly to 45.6 percent in 2014. Prepaid connections are expected to increase to almost 6.7 million in 2010.
“With total mobile connections to reach over 14 million in 2014 in Hong Kong alone, it is surprising to reveal that 45.6 percent of the connections are prepaid”, said Sherrie Huang, Analyst based in Hong Kong. Table 1 below shows the Hong Mobile forecast from 2009-2014.Source: Ovum
“Prepaid will continue to grow steadily however considering the maturity and limited size of the market there is limited room for new user growth outside attracting existing post-paid subscribers or providing new prepaid services such as high-speed mobile broadband”, said Sherrie Huang. “We see visitors and foreign domestic helpers (FDH) are the main segments of prepaid business in Hong Kong.”
Prepaid becomes increasingly important as competition increases and the attitudes of operators and consumers change towards prepaid mobile services in traditionally strong postpaid markets such as the US and Hong Kong.
“Operators are realizing the important role of prepaid services in competitive differentiation and revenue generation as the Hong Kong market becomes more saturated and the competition gets increasingly intense”, adds Huang. “This can be seen from the increasing number of prepaid offerings and market promotions, emerging prepaid price wars and falling prepaid ARPU”.
Domestic operators are also facing retail competition from operators in other countries, such as China Mobile and China Unicom from Mainland China, and Smart and Globe from the Philippines. Moreover, subscribers have become more cost conscious with communication expenses as the Hong Kong economy has been negatively affected by the global financial crisis.
“Considering the maturity and limited size of the Hong Kong mobile market, prepaid connections will still grow but at a lower speed going forward than in 2010”, comments Sherrie. More prepaid mobile broadband services will be available in the market and there will be more high-speed prepaid mobile broadband services as operators upgrade their networks.
Sherrie Huang concludes that Ovum also expect the demand for communication services from Greater China travellers will continue to increase as the economic ties are growing among Greater China areas.