Mobile communications remains the most perspective segment of telecom market in the world; revenue of cellular operators was increasing even in the period of economic crisis in 2009-2010. Nevertheless the average ARPU is keeping its drowning in the world. The connection of the “last billion” of subscribers (poor developing countries), decreasing level of consumption of traditional communication services (voice, SMS) in developed countries due to the increasing penetration of mobile broadband access services, smartphones and increasing popularity of OTT-services are influencing such decrease in ARPU. Russian cellular market is in the top 5 of the most dynamic markets in the world by many indices. J’son & Partners Consulting presents main results of the research of the comparison of the main market indices on the mobile communication services market in Russia and in the world.
RUSSIA AMID THE GLOBAL CELLULAR COMMUNICATION MARKET
At the end of 2012 the number of mobile communication services was over 6.4 bln. (by number of active SIM cards). Around 3/4 of the global subscribers’ base is located in developing countries. The connections of the “last billion” of subscribers from poor population are still forming the unsatisfied demand on the basic services of cellular connection (voice, SMS, simple data transfer 2G/GPRS), that is influencing the yearly market growth. Average growth rate of number of users in developing countries was 12.5% vs 3% in developed countries in the period of 2008 – 2012.
The largest telecom markets in the world are China (1.1 bln. subscribers) and India (0.87 bln. subscribers). USA with 310 mln. users is following in the role of the most developed market of cellular communication in the world by technological, marketing and economic indices, Brazil has the 4th place (248 mln.), Russia is on 5th place with 230.5 mln. subscribers. Russia is worth mentioning in this top 5, as we have the shortest period of development, with very large territory, difficult climate and very unequal distribution of population on the territory of the country.
DYNAMIC OF CELLULAR OPERATORS' REVENUES IN RUSSIA AND IN THE WORLD
During the after crises period the investments are renewed and continue its growth in the industry. 4,2% was the annual market growth for 2008 – 2012, such growth was provided mainly by the developing countries such as Asia and Africa. This very tendency will remain until 2017, although the growth rates will constantly decreasing. In general, the analysts from GSMA association are expecting the decrease of CAGR index almost twice till the level of 2.3% for 2012 – 2017.
Russian cellular operators reached the level of revenues of 26.6 bln.USD at the end of 2012 that is making them close to such developed and mature European markets as in Germany, UK and Italy. Nevertheless the revenues of Russian operators have the fastest growth rates in comparison with European in 2008 – 2012, that is the signal that market has still the potentional for development and market saturation with 3G has not reached its peak. All these factors are making Russian cellular market very appealing in comparison with European markets where we can see market stagnation: low growth of LTE, economic crises, and decreased revenues from traditional services due to OTT-services. It is worth to mention that some markets are still overstepping all other markets: USA – 171.3 bln.USD – the highest ARPU in the industry and highest level of LTE's penetration; Japan – 88.4 bln.USD – the distribution of revenue with straight direction to the «income»; China – 94.4 bln.USD – highest number of subscribers (over 1 bln.) and active development of 3G. Exactly these three markets should be accepted as the key growth drivers for development of global telecom industry. In the table below the dynamic of cellulars' revenues is being presented in some developed and developing markets in the period of 2008 – 2012.
Table 1: Revenue of cellular networks in some developed and developing countries, mln.USD, 2008 – 2012
USA, China and Japan are the largest countries by revenue volume from cellular communication. Russian market is also on the way and is becoming more and more important, and is having 6th place after Brazil and France.
DYNAMIC OF SUBSCRIBERS' ARPU IN THE WORLD
Global cellular communication market is still very contradictional. It can be well seen by comparison of India and China: while having the comparable subscribers' base (0.87 vs 1.1 bln. subscribers), revenue levels are different almost fourth fold – 19.8 bln.USD in India vs 94.4 bln.USD in China in 2012. In some developed markets this tendency have been conquered with the help of 3G/LTE development and additional services, still most global operators are expecting the continuous decrease of ARPU (USA, UK, France).
Russian market is still appealing. Despite the economic crises, ARPU in Russia for the last five years is still keeping the positive level and keeps growing. ARPU of the average Russian subscriber increased from 9 to 10 USD (+11%) for the period of 2008 – 2012. This is due to the development of 3G/LTE and segment of additional services (feature of developed markets) and constant growth of consumption of basic communication services - growth of MoU (feature of developing markets). The factor that is keeping ARPU from stagnation is the payments for national roaming.
CONSUMPTION VOLUMES OF TRADITIONAL SERVICES IN THE WORLD
Voice mobile communication services are still the key services for subscribers and source of revenues for operators. The vivid example is the total voice traffic in global cellular networks that has increased from 5.8 till 9.5 trln.min in the period of 2008 – 2012, the average annual growth rates of CAGR 13% (Illustration below).
Global traffic of SMS and MMS is still growing mainly thanks to developing countries. The traffic is almost not changing in the developed countries and has the tendency for decrease mainly due to the cannibalization of OTT-services (that is happening because of growth of penetration rate of smartphones and development of mobile networks of 3d and 4th generation). OTT-services such as WhatsApp, iMessenger etc will keep the tendency for growth in the view of constant price decrease for smartphones. According to GSMA this segment will reach 28.2 trln.messages at 2017.
THE IMPACT OF MOBILE BROADBAND ACCESS FOR GLOBAL CELLULAR MARKET
The dynamic growth of mobile broadband access is the key and dominant factor for development of cellular networks all around the world for the past years. The average growth (CAGR) of number of mobile broadband access’s users was around 30%. The number of mobile broadband access users was over 1.5 bln. in 2012 and in 2013 it is expecting to be around 2.1 bln. According to Ericsson data, the average global coverage of 3G networks has reached 56% and will reach 85% at 2018 (if the same growth rates will remain the same).
The average growth of mobile broadband access subscribers in developing countries was 55% that is much higher than in developed countries – 18.6%. China, where the number of broadband access users have grown from 3 till 233 mln. (in the period of 2008 – 2012), is the key driver for market growth. Indian market of mobile broadband access is also rapidly growing. It is mainly due to the government interest in provision population who lives in villages and remote regions with new infrastructure: to use broadband access for increasing the productivity of transport system, development of banking services, healthcare, education etc. In general, at 2016 the number of broadband access users in India will reach 367 mln. that is higher than in USA (337 mln.) but still not that many as in China (639 mln.).
3G coverage: West Europe - 94%, West Europe – 72%, Arabic countries – 22%. The geographical diversification of mobile broadband access users is showed below. USA, Asia and Europe are still keeping the leading positions by number of mobile broadband access subscribers.
77 mln. users in 2012 and 90.1 mln.in 2013 – was the number of broadband access users in Russia. 3G coverage in Russia is 75% that is rather low in comparison with developed countries and China (90 – 100%). All of this is putting Russia on 3d place by number of mobile broadband access after USA and Korea, but we are overstepping Brazil a little bit (72.7 mln.) and India (61.7 mln.). But Russia won’t keep the 3rd place for long, as the growth rates of the local markets are much higher in Brazil (168%) and India (77%) in comparison with Russian 28%. Nevertheless, Russian growth rates are still impressing as they are higher than in many European markets, where the dynamic is low (17% for Germany and Italy in 2012).
Maximum level of mobile broadband access services penetration rate will reach 113% in Japan, around 75% in USA and 72% in UK. Russia is following the global market leaders with over 50%.
As a summary we can mark that almost all indices of use of traditional mobile communication services in the world (voice, SMS, simple data transfer 2G/GPRS) are having the tendency to saturation (same as developed markets). The growing volume of consumption of such services is happening mainly due to the developing markets. The tendency of decreasing ARPU still remains, thus operators are trying to find new ways to keep and expand revenues from mobile communication. Operators are hoping that development of 3G, 4G and expanding of devices' markets (for ex. Market of Tablet PCs) will help them. At the same time, based on the experience of many developed countries, we can assume that stabilization of ARPU is possible via successful integration of traditional, new services of mobile communication and removing the effect of cannibalization from OTT-services.
In the view of global cellular markets, it is obvious that Russian market has high and dynamic indices of consumption of traditional services of mobile communication, mobile broadband access, increasing ARPU and as a result we can state that Russian cellular market will develop and sometimes even faster than global tendencies.
Detailed results of the research are presented in the full version of the Report: «Mobile services market in Russia and abroad, comparison of main market indices»
1. Mobile communication services market (Quantitative indices)
1.1. Number of active users of mobile broadband access
1.2. Number of active users of mobile broadband access per 100 inhabitants
1.3. Number of mobile communication subscribers
1.4. Number of mobile communication subscribers per 100 inhabitants
1.5. Households that use cellular communication, %
1.6. Number of people that use cellular communication, %
1.7. Coverage of cellular communication, % (number of people)
1.8. Coverage of 3G, % (number of people)
2. Mobile communication market (monetary indices)
2.1. Revenue from mobile networks
2.2. Mobile communication services, yearly investments
2.3. Expenses on mobile communication
3. Traffic in mobile communication networks
3.1. Outgoing mobile traffic in the frame of one mobile network, min
3.2. Outgoing mobile traffic onto other mobile networks, min
3.3. Outgoing mobile traffic onto fixed networks, min
3.4. International outgoing mobile traffic, min
3.5. Incoming international traffic onto mobile networks, min
4. SMS and MMS
4.1. Sent SMS
4.2. Sent MMS
4.3. The cost of 1 SMS in the network
4.4. The cost of 1 SMS onto other networks
6. Annex 1. Definitions
List of Illustrations:
Figure 1. Number of active users of mobile broadband access in the world, mln.
Figure 2. Mobile traffic of data transfer in the world, by type of terminal, Exabyte per month, 2012-2017
Illustration 3. Users of mobile broadband access, geographical distribution, 2013
Figure 4. Number of active users of mobile broadband access per 100 inhabitants, %
Figure 5. Number of active users of mobile broadband access per 100 inhabitants by regions, 2013, %
Figure 6. Number of cellular communication users in the world, mln., 2008-2012
Figure 7. Subscribers of mobile communication by regions in 2012 and average growth rate of CAGR 2008-2012
Figure 8. Penetration of mobile connection per 100 inhabitants in developing and developed countries, 2008-2012, %
Figure 9. 3G networks coverage growth, (people in the world)
Figure 10. Mobile operators’ revenue in the world, bln.USD
Figure 11. Investments in mobile connection in the world (CAPEX), bln. USD.
Figure 12. The correlation of pre- and postpaid contracts in the world
Figure 13. ARPU dynamics in the world, USD per month
Figure 14. ARPU dynamics by geographical regions, USD per month
Figure 15. Forecast of global mobile traffic, PB per month
Figure 16. Forecast of voice mobile traffic in the world, bln. min
Figure 17. International voice traffic, bln.min and growth rates, %
Figure 18. Number of sent SMS in the world, bln.
Figure 19. The distribution of SMS by world regions, 2012
Figure 20. Forecast of SMS (sending) consumption by smartphones users in West Europe, bln., 2009 - 2017
Figure 21. Number of sent MMS in the world, bln.
Figure 22. The distribution of SMS by world regions, 2012
List of Tables:
1. Number of active users of mobile broadband access in the developing and developed countries, thousand
2. Number of active users of mobile broadband access per 100 inhabitants in developing and developed countries, %
3. Number of mobile communication subscribers in developing and developed countries, mln., 2008-2012
4. Penetration rate of mobile communication by geographical regions, 2008-2012, %
5. Penetration rate of mobile communication per 100 inhabitants in developing and developed countries, 2008-2012, %
6. Households that use cellular communication in developing and developed countries, 2008-2012, %
7. Number of people that use cellular communication, in developing and developed countries, 2008-2012, %
8. Coverage of cellular communication, % (number of people) in developing and developed countries, 2008-2012
9. Coverage of 3G, % (number of people) in developing and developed countries, 2008-2012
10. Revenue from mobile networks in developing and developed countries, mln. USD, 2008-2012
11. Mobile communication services, yearly investments in developing and developed countries, mln USD, 2008-2012
12. Prepaid expenses on mobile communication in developing and developed countries, USD per month, 2008-2012
13. Postpaid expenses on mobile communication in developing and developed countries, USD per month, 2008-2012
14. Monthly subscribers fee for mobile communication in developing and developed countries, USD per month, 2008-2012
15. Outgoing mobile traffic in the frame of one mobile network in developing and developed countries, mln min., 2008-2012
16. Outgoing mobile traffic onto other mobile networks in developing and developed countries, mln min., 2008-2012
17. Outgoing mobile traffic onto fixed networks in developing and developed countries, mln min., 2008-2012
18. International outgoing mobile traffic in developing and developed countries, mln min., 2008-2012
19. International incoming traffic onto mobile networks in developing and developed countries, mln min., 2008-2012
20. Sent SMS in developing and developed countries, mln, 2008-2012
21. Sent MMS in developing and developed countries, mln, 2008-2012
22. The cost of 1 SMS in networks, in developing and developed countries, USD, 2008-2012
23. The cost of 1 SMS onto other networks in developing and developed countries, USD, 2008-2012
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