Frost: Underserved Areas Prime for Growth in Asia’s Telecom Industry
April 2, 2007 // Published as a news service by IHS
Recent analysis from Frost & Sullivan found that the Asia-Pacific telecommunication services market (minus Japan), which includes fixed, mobile, Internet and data communications services, earned revenues of $181.4B in 2006, with estimates to reach $298.2B by the end of 2012.
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Analysts said mobile services accounted for the bulk of telecom revenues in 2006 at 61.3%, while fixed, Internet and data communications services accounted for 25.4%, 8.9% and 4.4% respectively.
Fixed telephony subscribers in Asia-Pacific totaled 402.2 million in 2006, analysts said, with estimates to grow at a compound annual growth rate (CAGR) of 2.7% from 2006 to 2012, driven mainly by the subscriber growth in China and India.
"While the number of fixed-line subscribers are already on a steady decline in most Asia-Pacific countries, markets such as China, India, Indonesia and Thailand, which have large populations and low household penetration rates, continue to experience growing subscriptions," said Frost & Sullivan research analyst Karpagam Palaniappan.
Asia-Pacific has remained one of the few surviving high-growth mobile markets at a time when the cellular industry is fast approaching global saturation.
Analysts said the cellular subscriber base was 819.5 million (excluding Japan) in 2006 and is forecasted to reach 1.68 billion by the end of 2012, at a CAGR of 10.8% (2006-2012). The region’s robust growth is fueled by China, India and Indonesia.
Mobile operators in China, India and emerging markets such as Indonesia and the Philippines are now moving into the untapped rural areas to take advantage of the low penetration rates and sustain growth. Nevertheless, analysts said the telecom industry in Asia-Pacific is challenged by deregulation, economic conditions, inadequate awareness of emerging technologies, low household penetration levels and service quality issues. This negatively impacts both consumers and service providers.
"A case in point is the huge success of IP (Internet protocol) telephony globally and its relatively low impact in Asia-Pacific due to regulatory uncertainty, lack of bandwidth, interconnection and quality of service issues," said Palaniappan. "Similarly, technologies such as 3G (third generation), WiMAX (worldwide interoperability for microwave access) and FTTx (fiber-to-the-exchange), which are rapidly gaining popularity worldwide, are only just emerging in Asia."
Analysts said intense competition and market consolidation coupled with innovations and investments in emerging technologies, as well as improved quality customer service, are likely to be key factors shaping the growth of the telecom industry.
Source: Frost & Sullivan.