The current economic environment is forcing mobile operators to focus on reducing overall company operating costs. A number of strategies in this cost-driven market are being implemented, such as producing more low-cost handsets, offering cheaper mobile plans in order to retain customers, enlisting in infrastructure sharing opportunities and utilising outsourcing services. Some operators are also looking for ways to reduce support service costs, either by charging for support services or offering self-help alternatives.
The mobile industry is also pinning its hopes on the emerging markets to sustain subscriber growth levels in the economic downturn. So far this is holding true, with both India and China recently reporting positive subscriber growth. BuddeComm forecasts that overall global mobile subscriber growth will drop to around 13% in 2009.
One area that is already feeling the impact of the financial crisis is the handset market. Mobile users are changing their spending habits and delaying plans to upgrade or buy new handsets. As a result, handset sales are expected to decline in 2009. On a brighter note, there was evidence in 2008 that smartphone sales were beginning to grow in the high end markets and the long term outlook for smartphones is very promising.
Mobile termination rates and roaming charges continue to be an important source of revenue for operators. However government and consumer pressure continues to mount on operators to lower their charges even further, despite some operators already reporting a drop in overall revenues as a direct result of the declining rates. In 2009 mobile roaming revenue accounts for around 5% of total mobile revenues worldwide.
Prepaid mobile has always been very popular as a low-cost option in the emerging markets. Now prepaid plans are being touted as a way for all consumers to save money in the economic downturn. The prepaid market is hoping consumers will turn to its services rather than abandon ownership of a mobile phone altogether. However, the market may also feel a negative impact as its traditional customer base is usually middle and lower income earners – often the hardest hit in such times. From a broader perspective, the prepaid model is still a huge success worldwide and in recent times the differences between prepaid and postpaid service offerings has begun to fade.
There are now hundreds of MVNOs around the world and the market is witnessing a shift away from traditional business models as operators and new market entrants alike trial models based on niche markets. Models are being developed around data services, music services, health services, luxury services and devices (such as Nokia’s Vertu Club). There are also MVNOs targeting certain consumer segments, for example tourists, foreign workers and youth markets. Another niche market has developed via the 3G networks, which provide MVNOs an opportunity to offer data multimedia services in addition to the existing low-cost voice and SMS. Given the current economic downturn, we also expect to continue to see MVNOs offering lower price services.
In early 2009 there were over 400 million 3G subscribers worldwide and despite the financial crisis, there are big plans ahead for one of the largest emerging 3G markets – China, which hopes to benefit from huge investments in 3G network deployment. India is also finalising 3G licensing arrangements and it is expected that spectrum auctions will be held in 2009. Russia is also an emerging market to watch – it has the largest mobile market in Europe. Future mobile growth in the country will continue to be driven by voice in the short to medium term until availability and penetration of recently launched UMTS/3G services is high enough to offer affordable and desirable mobile data and content services on a sufficient scale.
This report provides insight and analysis of the trends and developments taking place in the mobile communications sector. The report comprises global and regional statistics and information on mobile growth, including 3G uptake and the prepaid market. Other key topics include global mobile handset development and growth, the progress of FMC and FMS and the global MVNO market. Valuable statistics on ARPU, mobile revenue, call charges, and minutes of use are included as well as information on termination fees, roaming and mobile number portability. Information at a regional level is also provided for North America, Latin America, Europe, Middle East, Africa and Asia Pacific. The report contains BuddeComm’s analyses of the current and future mobile sector. Mobile broadband is covered in detail in a separate annual publication.
Key highlights of the new BuddeComm Report:
* In 2009 around of 70% of mobile subscribers worldwide are using prepaid.
* Fixed-mobile convergence continues to evolve and we have recently seen new data-centric services come to the market. Fixed-mobile substitution also continues to take place around the world as mobile operators seek to ensure this phenomenon continues.
* Subscribers are expected to rein in their mobile spending costs in the current economic environment by either changing to cheaper plans, making fewer or shorter mobile calls or delaying handset upgrades and new purchases.
* In early 2009 there were around 4 billion mobile subscribers worldwide, with some of the more mature markets having over 100% penetration. GSM is still the most popular mobile technology.
* Mobile users now make up more than 90% of all telephone subscribers across Africa, a higher percentage than on any other continent.
* Despite the global downturn, Latin America’s mobile market will probably continue to grow in 2009 albeit at a slower rate. Once the economy recovers, mobile telephony may regain momentum for a couple of years and then gradually slacken as countries reach mobile market saturation.
* Average mobile penetration across Europe reached about 125% by the beginning of 2009 while sustaining subscriber growth of about 8%. Mobile use is so ingrained among consumers that by early 2009 about a quarter of households across the EU27 had ceased using ordinary fixed-line connections in favour of mobile phones and voice over IP services.
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