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Global Wireless Data
Market Update - 2008
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http://www.chetansharma.com/globalmarketupdate2008.htm
Executive Summary
The Global Wireless Markets continued to grow rapidly especially in
India and China where the carriers (together) are adding over 20M new
subscriptions every month. India crossed the 400M subscription mark this
month while China whizzed past 650M in Q109. Overall, the global
subscriptions penetration edged past 60%. During 2008, revenues further
tilted towards data services, increasing 17% from 2007 EOY. The overall
global mobile revenues (including equipment) for the year reached the 1
Trillion dollar landmark in 2008, with over $830 billion attributed to
services revenues. Data revenues now account for over 20% of the global
service revenues.
For some leading operators, data is now contributing close to 40% of the
overall revenues. However increase in data ARPU is not completely
offsetting the drop in voice ARPU for most operators. From the true and
tested SMS messaging to the new services such as Mobile Advertising,
Social Networking, Commerce, Mobile Wallet, and others, different
services helped in adding billions to the revenues generated in 2008.
The US market expanded its lead over Japan in mobile data service
revenues for the year and is unlikely to cede ground in the months to
come.
The success of Apple’s Appstore (1B downloads in 9M across 37M devices
is not surprising but still impressive, look for another growth bump in
July) led to appstore mania across the ecosystem with every major player
in the ecosystem holding ambitions for Applesque success leading to
healthy competition and hopefully more innovation. Google’s Android also
kept the industry chatter on the high with a slew of new devices slated
for 2009. The ease of use of applications developed for G1 on the new
devices will define Android’s role in the ecosystem. If successful, it
will decimate the weaker ones from the equation going forward.
WiMAX vs. LTE debate took over the EV-DO vs. WCDMA talk and while the
majority of the industry is consolidating around LTE; open-platform
advocates are watching the arrival of WiMAX with great interest.
However, the down economy is delaying the establishment of Clearwire’s
nationwide footprint.
Chetan Sharma Consulting conducted its semiannual study on the global
mobile data industry. We studied wireless data trends in over 40 major
countries - from developed and mature markets such as Japan, Korea, UK,
and Italy to hyper growth markets such as China and India.
This note summarizes the findings from the research with added insights
from our work in various global markets.
Service Revenues
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US extended its lead over Japan as the most valuable mobile data
market in service revenue with US adding $34B vs. $29B for Japan in
2008. China with $15.8B was ranked number 3. US registered the
highest growth amongst the top 3 with over 40% increase from EOY
2007 levels followed by Japan at 25% and China at 21%.
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The top 10 nations by service revenues are: US, China, Japan, UK,
France, Italy, India, Germany, Spain, and Russia.
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The top 10 nations by data service revenues are: US, Japan, China,
UK, Italy, Germany, France, Spain, Australia, and Korea.
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NTT DoCoMo continues to dominate the wireless data revenues rankings
with over $4B in data services revenue in Q408 and almost $15B for
the year. Almost 42% of its overall revenue now comes from data
services. DoCoMo also crossed the 90% 3G mark last month.
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NTT DoCoMo was followed by China Mobile, Verizon, AT&T, KDDI, Sprint
Nextel, Softbank Mobile, T-Mobile USA, O2 UK, and China Unicom to
round up the top 10 operators by wireless data service revenues. It
marked the first year for T-Mobile USA to be in the top 10 list as
it went past SK Telecom. All the top 10 carriers exceeded $2B in
data revenues for the year 2008.
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The top 10 global operator groups now account for over 60% of the
global mobile data revenues.
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For the last couple of years, NTT DoCoMo has been the only carrier
exceeding $10B in yearly mobile data revenues. In 2008, as expected
it found company with China Mobile, Verizon Wireless, and ATT in the
exclusive $10B club. KDDI missed out by a whisker.
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Data revenues for the top 10 operators increased 27% from EOY 2007
and now account for almost 48% of the global mobile data revenues
though their subscriber share is around 30%.
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The biggest jump in data revenues was experienced by the US carriers
– ATT and Verizon Wireless respectively. They were followed by China
Mobile. (For
a complete US Market Update, please see our Q208 research note).
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NTT DoCoMo regained its position vis-à-vis KDDI w.r.t. mobile data
revenues. Their data coordinates stand at ($27, 42%) and ($25, 38%)
respectively.
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Most of the operators in developed nations are contemplating future
strategies to boost data revenues such that the decline in voice
revenues is at least compensated for. There are very few operators
who have experienced increase in overall ARPUs. Comparing the ARPU
for last 2 years, amongst the top operators, only Singtel, Rogers,
T-Mobile UK, O2 Germany, O2 UK, Verizon Wireless and ATT experienced
increase in both overall and data ARPU.
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China reported approximately $16B in data revenues for 2008 and the
percentage contribution is around 27%, data ARPU is around $2. For
India, data ARPU continues to stay around $0.50 as most of the new
adds are voice only subscribers and there is continued price
pressure in the market.
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China Mobile remains the most valuable telecom operator with over
$180B in market cap. It is followed by Vodafone at around $98B.
Telecom groups in mature markets are under enormous pressure to
either come up with a global expansion strategy or accelerate their
existing plans. The current recession has slashed their market caps
by 20-30%.
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In 2008, SMS’s vice like grip on data revenues continued to loosen a
bit with many carriers seeing an increase in non-SMS data revenues.
On an average, Japan and Korea have over 70-75% of their revenue
coming from non-SMS data applications, US around 50-60%, and Western
Europe around 20-40%.
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NTT DoCoMo has been at the cutting edge of the mobile data evolution
by creating new markets and exploring new technologies and social
experiments ahead of almost anybody else in the market. We looked at
the data revenue growth at NTT DoCoMo since the introduction of i-Mode
almost 10 years ago. During the last 9 years, overall ARPU has
declined 33% though data ARPU increased over 1800% and now accounts
for almost 40% of DoCoMo’s service revenues. The voice ARPU has
declined almost 60%. Our long history with the Japanese and Korean
markets has taught us that while the individual strategies in each
market will differ, one should study the trends and technologies in
these markets to get a sense of what’s coming.
ARPU
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Most of the major operators around the world have double digit
percentage contribution to their overall ARPU from data services.
Operators like DoCoMo, and Softbank are over 42%. KDDI, 3 Australia,
3 Italy, 3 UK, O2 UK, Singtel, and 3 Sweden exceeded 30%.
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ATT reported the highest increase in data ARPU from 2007 with 32%
growth. Other notable percentage increases in ARPU were from KDDI,
DoCoMo, Softbank Japan, 3 Australia, Vodafone Italy, Rogers, Verizon
Wireless, and T-Mobile Austria. The biggest drop in percentage terms
were registered by the Indian operators with average data ARPU
dropping to $0.50. In terms of absolute dollar amount, NTT DoCoMo
leads the pack with $27 data ARPU.
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The biggest percentage contribution by data ARPU has been
consistently registered (since mid 2002) by two Philippines carriers
– Smart Communications and Globe Telecom with over 56% (or $3)
contribution coming from the data services. Philippines is also one
of the most active messaging nations where users average a
message/hr round the clock.
Subscriptions
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The global mobile markets continue to grow at an explosive pace
touching 4B subscriptions by 2008 up 23% from EOY 2007 levels and
will likely cross the 5B mark in 2010. Overall the global mobile
subscriptions now represent over 60% of human population on Earth.
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China and India continued their red-hot growth throughout 2008.
Combined, they added 212.8M new subscriptions with India edging
China by 15% for the first time in yearly net-adds.
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Earlier this month, India also crossed the 400M subscriptions mark,
only the second nation to do it after China. In total, China is
still years ahead. In the meantime, US crossed the 90% subscriptions
mark earlier this year.
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In March, India edged past the US to become the number two wireless
market (by subscriptions) in the world. In the last two years alone
it has added almost 175M new subscriptions (in comparison China
added 169M and the US market added 39M). For the past 7 months,
India has been displaying Phelpsesque like flair in setting and
beating its world record for 6 times, twice exceeding 15M/month
net-add. For the last 7 months, the market has been exceeding 10M
net-adds/month with Mar 09 being at a whopping 15.6M making it a
record for monthly net-adds in a given country at anytime in the
history of the industry or any industry for that matter (breaking
its previous record set in Jan09).
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In the last 10 years, the growth patterns in the mobile industry
have completely reversed. In 1998, the developed world accounted for
76% of the subscriber base, in 2008; the percentages have flipped
with developing world now accounting for 76% of the subscriber base
and are likely to increase to 85% by 2018.
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The top 10 nations by subscriptions are: China, India, US, Russia,
Brazil, Indonesia, Japan, Germany, Japan, and Pakistan.
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China Mobile with 457M (as of Dec 08) remains the #1 carrier in
terms of the total number of subscriptions followed by Vodafone at
255M and Telefonica with 196M subscriptions. América Móvil, Telenor,
China Unicom, T-Mobile, Orange, MTS, and Bharti Airtel are the next
five largest telecom groups in the world.
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As far as 3G is concerned, there were over 400M 3G users (72% of
them are WCDMA users vs. EV-DO). Both Japan and Korea continue to
expand their 3G base with both reporting over 90%+ penetration.
Others
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Messaging still accounts for the lion-share of data service
revenues. However, other services such as Mobile Music, Mobile TV
and video streaming, Voice navigation, PNDs, Mobile Games, IMS, LBS,
Mobile advertising, and others have gradually chipped away the share
from messaging. Alternate devices with wholesale cellular agreements
are also flooding the market. In Japan, Mobile Commerce is expected
to do much better than Mobile Advertising. Though not much talked
about, enterprise applications are also being adopted widely esp. in
North America as more workers become mobile and corporations seek
efficiencies in their operations and supply-chain.
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Nokia eclipsed 100M/quarter unit sale in each of the four quarters.
It has sold over 468M handsets in 2008 (up 7.2% from 2007), more
than the next three handset manufacturers combined. Nokia’s global
market share stayed in the 38-41% range. Samsung at 15%, Motorola
with 9%, LG with 9.3% and Sony Ericsson with 8% rounded out the top
five. Despite the slowdown, the industry eclipsed 1B in handset
sales in 2008 and will do so again in 2009.
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China and India represent the biggest opportunities for the
Infrastructure providers. China launched 3G across the three
operators earlier this year. India is also going through its 3G
spectrum policy and is likely to resolve some of the contentious
issues shortly. Some of the biggest infrastructure contracts are
coming from these two countries as they look to expand coverage into
rural areas.
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Deployment of 3.5G technologies is in full swing. However, it is the
discussion of 4G that is occupying the headlines. Many larger
operators have laid out their plans for deploying LTE starting next
year. Meanwhile, Clearwire has been rolling out its WiMAX network,
one market at a time.
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While the talk of “Open Access” and “Open Platform” consumed much of
North America, it barely registered a decibel elsewhere. Several
significant events including 700 MHz Auction, Android, and Verizon’s
“Open Network” initiative elevated the consternation in the
ecosystem. Apple launched its 3G iPhone and Android’s first device
was introduced in the form of T-Mobile G1. Many more Android devices
are slated to be released in 2009.
Your feedback is always welcome.
Thanks.
Chetan Sharma
Disclaimer: Some of the companies mentioned in this note are our clients.
Ps. We will have an update on the impact of recession on the mobile
industry in our US Q109 update next month.
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