Numerous emerging regions within the Asia-Pacific (APAC) global region, where 3.7 billion people reside, provide fertile grounds for telecommunications retail industry growth. This new retail growth will be fueled almost entirely by mobile industry growth, which will in turn be driven by the rollout of substantial new 3G and 4G networks and services.
In a new report from Analysys Mason, the research firm states that this growth will be substantial – with a compound annual growth rate (CAGR) of seven percent between 2011 and 2016. Total telecommunications service revenue will grow by 29 percent during this period, from $229.7 billion in 2011 to $323.7 billion by 2016.
The report provides in-depth fixed and mobile subscriber and revenue forecasts for voice and data services, and details key drivers and challenges for telecommunications industry growth in the region. The analysis includes country-level forecasts for the major markets of Bangladesh, China, India, Indonesia, Malaysia, Pakistan and Thailand.
China and India together account for 68 percent of the region’s population, 64 percent of its active mobile SIMs and 75 percent of its total retail telecommunications revenue.
China will play the greatest role among these countries relative to overall growth, and will deliver the greatest chunk of overall revenue. The report points out that China is expected to grow from $138 billion in 2011 to $194 billion in 2016.
The Analysys Mason report, “The Emerging Asia-Pacific Telecoms Market: Trends and Forecasts 2011-2016,” points to a number of specific APAC trends:
- New rollouts of 3G and 4G services will account for 46 percent of mobile connections in the region by 2016.
- There will be improved broadband coverage and connectivity and higher international bandwidth capability.
- A rapidly growing demand for Internet access will lead to widespread take-up of smartphones and mobile broadband.
Analysys Mason predicts that active mobile penetration rates in the region will rise to 95 percent by 2016 – a 32-percent increase on 2011 levels. The number of active SIMs will increase from 2.33 billion in 2011 to 3.7 billion by 2016 – nearly universal regional coverage.
3G infrastructure will serve as the dominant mobile technology throughout the forecast period. By 2016, 41 percent of active SIMs in the region will be 3G, compared with just 11 percent in 2011. 4G/LTE will have limited impact during the forecast period, due to constraints around device availability and affordability.
Other LTE rollout delays will result from spectrum auction timings and operator capex constraints. By 2016, even the most optimistic estimates on LTE penetration in the region will not top 5 percent of the active SIM base. Penetration will be slightly higher in China at 7 percent, and in Malaysia at 8 percent.
Interestingly, India, Indonesia and Thailand will only see about 3 percent LTE growth, with Bangladesh and Pakistan coming in even lower.
The report argues that APAC broadband services will become more diverse, as wireless technologies reach new areas and as fiber is rolled out in cities. Mobile and fixed wireless will account for more than one-third of broadband connections in the emerging APAC region in 2016 – and for the vast majority of connections in rural areas where fixed-line infrastructure will always be unavailable. Broadband will obviously become an increasingly important revenue source for both fixed and mobile operators, as its availability becomes more widespread and the demand for data services continues to grow.
A Need for New Revenue Sources
Perhaps counter intuitively, mobile ARPU in the emerging APAC markets has declined significantly in recent years, from a regional average of $10 per month in 2008 to only $7.40 in 2011, though the rate varies significantly from country to country. The decline is a direct consequence of decreasing tariffs across the region, the extension of services to lower-income users who spend less on retail telecom services than established subscribers, and the increasing numbers of subscribers who have more than one SIM.
The regional decline in mobile ARPU, according to Analysys Mason, will continue between 2011 and 2016, but the pace of decline will slow down from what it was during 2008–2011. This is due to what will be increased spending on non-voice services, which will mitigate the effects that have driven the decline to date to some degree. Analysys Mason predicts that mobile ARPU across all of the emerging APAC markets will average $6.50 by 2016.
As mobile penetration approaches 100 percent, the report points out that the operators in these emerging APAC regions will need to look to rural areas, and for opportunities to provide customers with more than one SIM, in order to maintain growth in subscriber numbers.
They will also need to develop more sophisticated strategies to drive mobile data revenue and encourage retention within what is currently a largely prepaid subscriber base.
The overall voice market in the region will continue to be heavily dominated by mobile during the forecast period, with 90 percent of voice connections anticipated to be mobile by 2016 – up from 84 percent in 2011 and from 73 percent back in 2008.
Overall, the number of voice connections in the region is predicted to increase by 45 percent, to 3.9 billion connections. Most of the mobile voice connectivity growth will come from China and India.
Ultimately, the wireless carriers in the APAC region will need to become creative in order to ensure that overall subscriber growth remains healthy. The regions noted here are inherently poor, and it will be difficult to move the needle substantially. Nevertheless, services such as 3G and Internet access – which are of course directly tied to mobility – will be highly attractive to this specific population. It is something that becomes a necessity for this population to spend on.
In any case, it will be enough to drive $94 billion in new business over the next five years.
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Edited by
Braden Becker 
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