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November 13, 2013

Mobile Operators in Developing Regions Will Soon Face Developed Market Challenges

With some exceptions, subscription growth will not drive incremental revenues in the mobile business globally. Those exceptions are Africa and the Asia Pacific region. For the most part, mobile penetration is well advanced globally.

 So revenue growth will have to come from the sale of additional features, services and consumption by existing users. That is why mobile and fixed service providers are working so hard to uncover and create new services and features that underpin big new revenue sources.

 Even within the Asia-Pacific region, growth prospects are bifurcated. Apple is banking on growth of the middle class consumer able to pay relatively high prices for iPhones. In principle, there is clear room for growth of both the premium and mass market segments of the mobile device market throughout much of Asia.

 The only twist is that fixed network revenue is in some danger of receding, in the advanced markets of Asia, even if revenue projections for the Asia-Pacific region generally are acknowledged to be the fastest-growing globally, with some estimates pegging revenue growth at about seven percent a year.

 But telecom retail revenue in developed Asia–Pacific markets might still decline at a compound annual growth rate of –0.4 percent during the next five years, according to Analysys Mason.

 Overall revenue is expected to fall from $217 billion in 2012 to $213 billion in 2017, even as gross domestic product grows three percent during this period.

 As you might guess, the revenue decline will be driven by a fall in fixed revenue from $86 billion in 2012 to $74 billion in 2017.

 The mobile sector will grow at around 1.5 per year from $131 billion in 2012 to $139 billion in 2017.

 Fixed voice connections will decline by five percent between 2012 and 2017, from 138 million at the end of 2012 to 132 million at the end of 2017.

 Mobile network connections will increase by 21 percent, from 255 million to 267 million in the same period, but mobile retail revenue will decline because the average revenue per voice minute will decrease – drastically in some countries.

 That means mobile service providers even in developing parts of Asia will relatively quickly have to confront the same revenue challenges as suppliers in developed regions, namely the maturation of the voice product and the need to fuel growth of data access and application revenues.




Edited by Cassandra Tucker


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