Emerging markets and data form silver lining

Despite the economic gloom, which is expected to bite harder in 2009, the telecoms industry may take refuge in forecasts that emerging market growth and the development of mobile data services will push the sector to ever greater heights.

Figures released by industry analyst Ovum this week predict 5.63 billion mobile connections by 2013, up 43 per cent from 2008. Global penetration in 2008 is estimated at 59 per cent and is predicted to rise to just 80 per cent by 2013. Prepaid connections are estimated to constitute 73 per cent of connections in 2013, up from 70 per cent in 2008, so multiple SIM ownership will ensure that real population penetration will be lower.

Ovum notes that emerging markets are key to this continued growth. The China-India region (including Pakistan and Bangladesh) will continue to be the main connections growth engine, with a Cumulative Annual Growth Rate (CAGR) of 12 per cent up to 2013. Asia-Pacific and Africa are also expected to add a staggering number of connections, but while adoption in rural areas will continue, the penetration growth will naturally slow as fewer areas remain unconnected.

Steven Hartley, senior analyst at Ovum, notes that the growing importance of emerging markets will result in a shift in the global balance of operator power, spearheaded by new global players such as Zain and Orascom.

By 2013 the total service revenues to operators globally is forecast to reach $1.1tn, up 23 per cent from 2008, with voice remaining the most crucial revenue generator due to the increasing emphasis on emerging markets with a contribution of 73 per cent.

But after years of false starts, 2008 has finally seen data services take off. Data revenues as a whole (including messaging) revenue are forecast to grow 79 per cent globally over the coming five years.

Mature markets will provide much of this growth, accounting for 53 per cent of data revenues in 2013. But there will be a shift in the make up of data revenues, SMS pricing likely to be eroded and internet access gaining in importance.

“We do not believe that many operators will be successful in providing content. Players from the internet domain will be better placed, so demand from the operator will be for access,” said Hartley. However, the analyst does not believe internet players, such as Google and Apple, will be able to destroy the mobile operators.