Asian incumbents do it tough

MELBOURNE, AUSTRALIA: Average revenues for leading Asian telecoms incumbents fell for the first time in 2009, according to Ovum’s new report, Asia-Pacific’s Telecoms Overview.

Besides difficult macroeconomic conditions, price declines and market saturation were responsible for the decline in top-line revenue of 0.8 percent.

“In 2009, macroeconomic factors had a significant impact on operator performance, making it a financially difficult year for telcos,” said Nicole McCormick, Senior Analyst. “In addition, the rapid decline in fixed voice services and the slowdown in both broadband and mobile growth also affected results.”

Despite the decline in revenue, incumbents were able to slightly improve EBITDA margins through operational efficiency and cost-optimization programs.

“A greater focus was placed on these programs in 2009 when economic uncertainty was at its peak, resulting in average operational expenditure falling by 1 percent,” added McCormick, based in Brisbane.

On the other hand, Ovum’s mobile revenue forecasts for Asia-Pacific, predict continued trying times ahead for cellular operators.

Ovum expects mobile voice revenues in the region to peak in 2012, before declining to $176.8 billion by end-2015 as voice continues to commoditize.

“The good news for mobile operators is that data revenues will continue to offset declining voice revenues during the forecast period,” says Nicole McCormick.

But mobile revenue growth is predicted to increase by just 1.3 percent in 2015, compared with 2 percent growth in 2009.

“Overall voice/data revenues for mobile operators are tipped to increase from $267.1 billion in 2010 to $310.6 billion by 2015,” says McCormick. “By 2015, mobile connections in Asia-Pacific are predicted to top 3.84 billion, or 96 percent penetration.”

However, she warns that unless operators plan to save their way to success, new business models and drivers of growth are essential.

The most common areas being explored for future revenue growth are in adjacent industries such as international investments, IT services, entertainment (especially video), and methods to further monetize broadband access.

However, Ovum believes these new initiatives will have a relatively minor impact on incumbents’ overall performance as existing services will continue to provide the bulk of revenue share for some time.