Slowing Mobile growth - Choices for operators worldwide

If we look at the global wireless telecom industry as a whole, the growth is slowing down. It took 12 years for the GSM/W-CDMA global subscriber base to hit one billion. It took just 2.5 years to reach the second billion. And it will take just another year to reach the third billion, as the three-billion threshold will be breached by year's end. At the same time, wireless operators have gambled billions in new technologies such as 3G, HSDPA, WAP and mobile television. In most markets, these investments have yet to bear fruits.
In fact, a 2007 Telecommunications Industry Review report released by Insight Research Corp. shows that revenue from IP services represented a meager 0.9% of all global wireline and wireless revenue last year. That is projected to reach just 5.7% of the revenues forecasted for 2011.
The mobile voice growth figures cause some industry executives and many industry analysts to flash red warning lights at mobile network operators. Informa Telecom & Media, warns in a recent report that worldwide mobile subscriber growth has declined since 2001, a trend that will accelerate through the end of the decade. After rising 19.4% last year, growth will fall to 10% in 2008 and plummet to just 3% in 2011. The report also notes that dual-SIM and multi-SIM ownership is growing in some parts of the world. About 22.5% of all mobile subscriptions worldwide result from dual/multi-SIM ownership and this figure will rise through 2011. But will that be enough to compensate for a saturated market? Highly doubtful.
Let's analyse some of the predictions of Martin Garner, director of wireless intelligence for research firm Ovum -
- The majority of the world's mobile growth is expected to come from the Asia-Pacific region, although the fastest growth rate will shift from China to India, Pakistan and Bangladesh.
- In Western Europe, by contrast, three-quarters of the countries will end this year with a market penetration exceeding 100%.
- World market penetration will hit 47% in 2007, compared to 41% at the end of 2006. That means many mobile operators will find it much harder to make a buck, especially in developed markets like Western Europe, Japan and the US.
- In the most developed cellular markets, penetration is well over 100%. Italy, for example, is currently very close to 140%. Clearly this means that there are multiple connections per real user, and some statistics are becoming available to measure this phenomenon. The SIMs-per-user number is about 1.7 in Italy. But multiple users also abound in less-developed, high-growth markets such as Egypt, South Africa and Turkey where the number is 1.2.
- 406 million new mobile connections worldwide this year, which translates to a growth rate of about 15%. APAC will account for 1.2 billion of the world's three billion connections by year's end. Africa will emerge as the world's fastest-growing region with 28% growth this year (although here, too, the rate of growth is slowing).

Now if the new mobile voice subscription growth is declining, what options are left for such operators.
-The challenge for mobile providers is to quickly popularise the data based mobile services.
- One way wireless carriers are compensating for the slowing growth in mobile voice is by building new service infrastructures. Garner says W-CDMA doubled its user base to just short of 100 million people last year. Similarly, cdma2000 1X EV-DO increased its user base by 88% in 2006 to end the year on 50.5 million. Ovum forecasts an 83% rise for W-CDMA this year and 61% for cdma2000 1X EV-DO. (The predictions don't include connections for China and India because not enough information is available.)
- The expectation is that data revenue and entertainment revenues will increase ARPU . Only this can offset slower subscriber growth.
- Worldwide mobile operators, which together comprise a $600 billion revenue business, have to become more innovative and flexible in managing their businesses. Success will come in the ability to excel in areas they may not have paid much attention to before, such as managing multiple business lines, coping with increased risk and enhancing organizational effectiveness.
- In a lower-margin environment, the risk of taking the wrong action is greater that the risk of inaction. Mobile carriers need to diversify their businesses by choosing one or more strategic options. These include acquiring businesses (or being acquired) to move into the quadruple-play services world; building a new business (such as VoIP) along the existing one; creating experimental businesses while staying focused on the core business; or stalling off the competition through lobbying. (as per Brian Corey, telecom practice leader at Katzenbach Partners LLC)

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