Emerging Markets

Nokia continues to lead smartphone market; outpacing rivals

Paul Rasmussen — Fri, 06 Nov 2009 12:19:15 -0500

Much has been made of the rocketing growth of Apple, RIM and HTC in the smartphone market, while Nokia has been lambasted for failing to recognise the trend and has missed out on this fast growing handset segment.

However, IDC's worldwide quarterly mobile phone tracker continues to position Nokia as the overall leader in converged or smartphone shipments with the popular flagship device, the N97, driving its market share to 37.9 per cent in Q3/09, compared to 37.1 per cent a year ago.

RIM has overtaken Apple to gain 2^nd place, albeit that its shipment volumes were largely North American-based. However, the company also posted significant improvement internationally, with some regions recording triple digit growth year over year.

Apple recorded its highest volume yet in a single quarter, driven by the near worldwide availability of the iPhone 3G S which triggered another round of annual replacements for Apple loyalists. However, while the iPhone has struggled within emerging markets, its arrival at China Unicom this year could foreshadow greater shipment volumes (although early reports would seem to indicate otherwise).

HTC retained 4^th position, excluding phones sold under another company's brand, and remains the largest provider of Windows Mobile-powered devices. Samsung returned to the top five vendors during Q3/09, although volumes were flat from a year ago. The company saw marked improvement in Asia/Pacific, Latin America and EMEA, and has been a big supporter of Windows Mobile.

For more on this story:
Evertiq

Modest mobile growth in emerging markets

Paul Rasmussen — Wed, 23 Sep 2009 10:02:24 -0400

The worst effects of the global recession may be over for mobile communications in emerging markets. Second quarter results from major operators in Asia, Africa, the Middle East and Eastern Europe show modest growth in subscriptions and usage, according to a recent report from Strategy Analytics.

After three successive flat or declining quarters, average minutes of use for a basket of 26 key operators climbed a respectable 5 per cent in Q2 2009, a rate not seen since the same period in 2008. Total subscriptions rose 4 per cent, continuing a recovering trend begun in the first quarter of the year. Article

Report: Mobile money in emerging markets still fragile but ready to become a mass-market service by 2014

Wed, 29 Jul 2009 13:55:01 -0400

A new report from Ovum is said to reveal activity in mobile payment services--and more broadly mobile money services--is accelerating in many emerging markets. The report, 'Mobile money in emerging markets', says the market is still in its infancy, yet it has the potential to become a mass-market service, penetrating one-third of all mobile users in emerging markets in five years' time. However, much will hinge on how well the industry addresses various market barriers, and its ability to nurture user demand with clear, simple and attractive propositions, it claims.

The mobile money market has accelerated in the last two years in emerging markets, mostly in more mature markets. “The success of Vodafone's Kenya subsidiary Safaricom with its mobile money service M-Pesa has underlined the potential for mobile money services,” said Angel Dobardziev, co-author of the report. Yet, despite more than 100 launches of mobile money services by both service providers and banks globally the market remains in a fragile state with few well-established services. Article

Laptops to drive mobile broadband uptake - data growth 40x by 2017

Paul Rasmussen — Fri, 17 Jul 2009 12:29:16 -0400

The impact of netbooks and laptops on the growth of mobile data traffic has been significant, but a new study claims that, by 2017, there will be 418 million users worldwide using these portable devices generating 1.8 exabytes of traffic per month--a forty-fold increase over 2009.

According to the research, conducted by Coda Research Consultancy, mobile broadband revenues of nearly US$50 billion will come from netbook/laptop users by 2017, with the Asia-Pacific region having 162 million users, Europe 94 million and North America 58 million.

Of note is the estimated impact that LTE will have, with half of all mobile broadband via netbook and laptop users using LTE worldwide in 2017. LTE users will hit 38 million in 2013 after a ramp up in LTE production in 2012, and will rise to 209 million by 2017, a 1100 per cent increase over 2012.

According to Steve Smith, of Coda Research, "LTE take up will be greatly skewed toward European and North American markets in the short to medium term, where ARPU will be highest. However, we will also see significant take up in China, and we may also see countries like India bypass 3G altogether, and move straight to LTE."

However, Smith warns that, while there are tremendous opportunities for both operators and device and component vendors, the risks are significant. "With enormous growth in traffic and considerable decline in ARPU, operators will need to be ruthlessly efficient. Asia Pacific is going to be the hotbed for growth, but it is a complex picture of emerging markets, developed markets and even markets that will leapfrog 3G altogether. LTE is going to be an important cushion for operators, but our research shows they will need to take into account the very different factors impacting 3G and 3G+ growth across regions and decide carefully how, when and where to market LTE."

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Click here to see data from the report
Check out the Coda Research press release

Entry-level handset markets to enjoy 24% annual growth through 2014

Paul Rasmussen — Fri, 17 Jul 2009 11:55:57 -0400

The world's largest underserved markets for mobile communications are in developing nations and regions. Asia, Africa, Latin America all have vast potential, but formidable barriers stand in the way. Among the most immediate: the low disposable income of most of the population. Low cost and ultra-low cost (ULCH) handsets are seen as part of the solution to that problem, and according to a new study from ABI Research the two categories together will see a compound annual growth rate (CAGR) of 24 per cent over the next five years.

"The price of a ULCH handset is widely seen as critical to the tipping point for mass adoption in emerging markets," said industry analyst Michael Morgan. Handsets are rarely subsidised in emerging markets. The GSMA has pegged the maximum desirable ULCH handset price at US$25 through next year and at US$20 for 2011-2012. Morgan extends that curve: "I believe in 2013-2014 the top price for a ULCH phone will be no more than US$15, which is feasible because some handset models are hitting that price today." Article

Emerging markets start to mature

Paul Rasmussen — Tue, 16 Jun 2009 12:37:05 -0400

The opportunities presented by emerging markets have become increasingly complex. Some are already exhibiting the signs of voice saturation, others are looking to deploy mobile broadband services, while some Indian and Chinese operators seem determined to expand beyond their national boundaries.

This diverse level of market development is apparent in Africa, the Middle East, Latin America and elsewhere, but is most evident in southeast Asia/Pacific.

This region, in which I will include China and India, is displaying almost the full range of cell phone market characteristics--from unsophisticated voice and text messaging up to operators such as China Mobile and Bharti Airtel that are aggressively looking to invest in new and high-growth market segments.

The challenges are many. Some large operators face slowing growth rates in their home markets, a situation some have countered by forcing their way into developed regions--as illustrated by Bharti Airtel's merger deal with South Africa's MTN. And smaller operators are suffering an overabundance of competition.

Operator glut

According to Marc Einstein, industry manager for Frost & Sullivan Singapore, there are a number of countries with an operator oversupply. In Indonesia there are 11 operators, India likely will have 12 by the end of this year, seven are active in Vietnam, Bangladesh has six, and Cambodia has eight mobile operators with a population of only 14 million.

This situation looks untenable given the inevitable fierce competition triggered by this level of operator saturation. "I wouldn't be surprised to see a cash-rich firm such as China Mobile enter a number of these markets and acquire some of the more proficient," maintains Einstein.

However, this profusion of operators is but one issue. "More importantly, we have seen negative growth quarter-on-quarter from some of these operators because competition is so ferocious. Globe Telecom in the Philippines reported negative revenue growth for the year, which is not something you would normally see in emerging markets," he said.

Also, SIM subscriber numbers in some countries are already in excess of 100 percent of population, such as in Thailand. Vietnam and the Philippines are already in the 80 percent range.

Second wave of growth

To create advantage in such a market, a growing number of mobile operators are looking to migrate their customers to 3G. The strategy behind this move is to entice a progressively more sophisticated population to use their wireless handset as their primary access point for the internet.

Indeed, the uptake of these new data services, albeit initially slow, is sparking a new behaviour, claims Saberio Romeo, industry analyst with Frost & Sullivan. "We haven't seen this in Europe or North America, where consumers have followed the evolution of mobile technology. Emerging markets are evolving on a different track, and at a faster pace."

These changes have given rise to a new label--transitional markets. Such markets carry trends from both emerging and mature markets. For example, some operators in the Asia/Pacific market are looking to outsource aspects of their business--previously the preserve of mature operators. On the other hand, these operators appear opposed to network sharing, a topic being explored by a number of operators in mature markets.

"There is almost no progress with network sharing," says Peter Elliot, head of wireless and broadband for PA Consulting. "This seems to be due to the different political model that operates in these newer markets, as against what we see in Western Europe."

A place for the big boys

Do these conditions provide opportunities for the likes of Vodafone, Telefonica or France Telecom?

According to Elliot, these multinational operators are still looking to expand into new markets while retaining very tight control over operating expenses in their European subsidiaries. "They are pushing out European investment plans into the future, as against emerging markets where there is little evidence of any change to their expansionist strategy."

France Telecom Orange refuses to increase bid for Egyptian operator

Paul Rasmussen — Wed, 10 Jun 2009 13:26:38 -0400

The long running saga of France Telecom Orange's attempt to acquire ownership of Egypt largest mobile operator, ECMS, has reached an acrimonious stalemate. FT Orange has now declared it will not increase its offer to buy out the minority shareholders of ECMS, and observers are not expecting to see either party moving from their increasingly entrenched positions.

The planned acquisition has been mired by dispute between FT Orange and Orascom, joint owners of ECMS via Mobinil, a company that owns 51 per cent of the Egyptian mobile operator. FT Orange has been looking to purchase the 28.75 per cent stake that Orascom holds in Mobinil.

Jean-Yves Larrouturou, deputy CEO of FT Orange (Middle East and Africa) has ruled out an increased offer. "The €237 per share offer is the highest possible level, and after the refusal of the Egyptian Capital Market Authority (ECMA), I don't have any intention to increase this level," Larrouturou said. The ECMA has rejected two offers from FT Orange claiming they were too low.

Orascom's mercurial chairman, Naguib Sawiris, has made it plain he will hold out for a bid of €273 per ECMS share, or a total of €1.7 billion for the 28.75 per cent shareholding Orascom has in ECMS.

Adding additional spice to this complex game, the Kuwaiti-based operator Zain is reported to be considering an offer to sell its African mobile networks to an unnamed French company. Zain said it is still waiting for a reply from the French company, and if no offer is made then it will study other offers for its African division.

For more on this story:
Cellular News and Financial Times

Vodafone prepares African expansion plans

Paul Rasmussen — Fri, 22 May 2009 11:06:01 -0400

The CEO of Vodacom has dropped strong hints Vodafone, which recently gained control of the South African-based company, plans to use the mobile operator as a platform to make further headway into other countries on the continent.

This seemingly goes against recent statements from Vodafone's CEO, Vittorio Colao, who said that "while emerging markets are of interest to us, our primary focus will remain on driving results from our existing assets."

However, Vodacom CEO, Pieter Uys, claimed Vodafone had committed to use Vodacom to enlarge its sub-Saharan business and provide support on potential acquisitions: "If you look at the world there aren't many growth opportunities around; Africa is one of them."

Uys believes that, given the Vodafone size and brand, it will be able to participate in cell phone markets that need to undergo consolidation. He pointed to the DR Congo as an example where a country cannot sustain nine mobile operators, but only has a penetration of around 12 per cent.

For more on this story:
Cellular News

France Telecom stopped from acquiring largest Egyptian operator

Paul Rasmussen — Wed, 08 Apr 2009 12:46:08 -0400

The Egyptian stock market regulator has thwarted an attempt by France Telecom (FT) to gain control of the country's largest mobile operator, claiming the French telco bid below a price mandated by the Egyptian court, and undervalued the company. France Telecom has commented it now has no intention of making a new offer for the Egyptian Company for Mobile Services (ECMS), which operates under the Mobinil brand.

However, FT will continue to have a large say in ECMS/Mobinil following a recent decision by an Egyptian arbitration panel ruling in FT's favour which will force Orascom--which had a near 30 per cent shareholding in Mobinil--to sell this stake to FT. Mobinil has a 51 per cent holding in ECMS which will now be sold to FT for approximately US$1.7 billion.

This sale will effectively mean FT has a 51 per cent shareholding in ECMS, a level it claims it is "very comfortable with."

This tangle of ownership remains complex given a shareholding in Mobinil that will remain under the control of Orascom and may again lead to the lawyers becoming involved. FT and Orascom went to court in 2007 over a dispute about their joint shareholding in ECMS, although the specifics of the disagreement have not been made public.

For more on this story:
Telegeography, Total Telecom and Computer Business Review

Vodafone's Q3 results--saved by Indian uptake and falling pound

Paul Rasmussen — Tue, 03 Feb 2009 14:04:51 -0500

Without a surge in subscribers at its Indian subsidiary and the weakness of the UK currency, Vodafone's Q3 results would have made for poor reading. The company coffers benefited considerably from the extra 2.1 million customers per month recruited by Vodafone India (bringing the total to just over 60m), but it was the dramatic slide in the value of the UK pound that chiefly allowed the company to report a Q3 turnover of £10.47 billion (a 14.3 per cent rise in headline revenues) for the quarter ending 31 December 2008.

Elsewhere, however, the group's established European operations, which account for 70 per cent of turnover, remained sluggish, with organic revenues easing by 1.4 per cent. Spain was particularly weak and the UK, where the company has 19.1 million customers, fell by 0.7 per cent. Turkey also suffered, with revenue tumbling 14.5 per cent in what is supposed to be a key growth country.

But, the company's African and Central European division increased revenues by nearly 7 per cent to £1.39 billion, helped by a strong performance from the South African business Vodacom. In the Asian, Pacific and Middle Easernt region revenues rose nearly 17 per cent to £1.51 billion, with 8 percentage points of the increase due to the inclusion of Vodafone's acquired business in India.

Vodafone also reported that data revenues in the UK grew by just over 30 per cent--a similar rate to the general industry rate of growth, and MVNOs and the sales of dongles were having a meaningful effect on results.

For more on this story:
Ovum and Financial Times

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