Telecoms retail revenue to decline at a CAGR of –0.4% in developed Asia–Pacific from 2012 to 2017, Analysys Mason report

SINGAPORE, 25 April 2013 – Telecoms retail revenue in developed Asia–Pacific (DVAP) markets is set to decline at a compound annual growth rate (CAGR) of –0.4% during the next 5 years, according to new research by Analysys Mason (www.analysysmason.com).

Overall revenue is expected to fall from USD217 billion in 2012 to USD213 billion in 2017. By contrast, GDP is predicted to grow overall by 3% during this period. The decline in the telecoms market will be driven by the fall in fixed revenue from USD86 billion in 2012 to USD74 billion in 2017.

By contrast, the outlook for the mobile sector is much healthier and is forecast to grow at around 1.5% per annum from USD131 billion in 2012 to USD139 in 2017.

The report, titled The developed Asia–Pacific telecoms market: trends and forecasts 2012–2017, analyses the most important trends that are affecting fixed and mobile telecoms services in the region, and assesses the impacts of these trends in the next 5 years. We include 13 countries in our definition of the DVAP region, including Australia, Hong Kong, Japan, Singapore, South Korea and Taiwan.

The principal reason for the region’s predicted downturn is a decline in fixed voice revenue. Fixed voice connections will decline by 5%, from 138 million at the end of 2012 to 132 million at the end of 2017. Mobile network connections will increase by 21%, 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.

“However, it is becoming increasingly difficult to extract the value of a mobile minute in developed economies such as those we examine, because of the high proportion of postpaid subscribers,” explained Tom Mowat, Principal Analyst and lead analyst of Analysys Mason’s Asia–Pacific research programme. “It may be more insightful to look at the value of a mobile connection, which will decline during the period – because of price pressure and the increase in lower-value connections such as mobile broadband and tablets – but at a slower rate than operators will be able to add new connections, resulting in growth.”

This growth is partly attributable to increases in mobile penetration of the population in the region (from 115% at the end of 2012 to 133% by the end of 2017) as well as significant increases in the percentage of smartphone SIMs throughout the period. Smartphones represented 42% of handset SIMs at the end of 2012 (up from 28% the previous year) and this proportion will grow to 84% by 2017. By the end of 2013, smartphone SIMs in the region will outnumber those of non-smartphones.

The report indicates that in both the mobile handset and overall mobile markets, 3G peaked at 86% of connections in 2011. 4G will account for 63% of total mobile connections by the end of 2017. 4G connections will outnumber 3G by 2016.

Commercial LTE offerings are available in all DVAP countries except Taiwan, and Japan and South Korea have large numbers of subscribers.

The report also predicts that the number of fixed broadband subscribers will grow from 75 million at the end of 2012 to 81 million by the end of 2017. The proportion of fibre-to-the-home/business connections will grow from 42% of the region’s fixed broadband connections at the end of 2012 to 48% at the end of 2017.

“Fixed broadband connections (including both residential and business) already exceed the number of households in Hong Kong and Singapore, where population density is extremely high,” Mowat explained. “The most rapid growth will be in Australia and Singapore, where fibre accounted for less than 1% of fixed broadband connections at the end of 2010. National broadband network projects could increase this to 13% and 46% respectively by the end of 2017.”