The uptake of mobile data services is driving wireless growth in the developing markets of South Asia, Middle East and North Africa.
These countries are all at different penetration and competition levels. South Asian countries (India, Sri Lanka, Bangladesh and Pakistan) are characterised by low mobile penetration rates and clusters of operators. Most of the countries in the MENA region have however surpassed the 100% penetration mark, even under controlled competition or duopoly environments.
"What these markets have in common though, is that they are all experiencing downward pressure on average revenue per user (ARPU)," says Frost & Sullivan senior research analyst Lokeshwari Nautiyal. "Therefore, telecom service providers are unleashing attractive packages to add value to mobile data services to stave off ARPU decline."
New analysis from Frost & Sullivan finds that total market revenues for the covered list of countries in these regions is over $55-billion in 2008 and estimates this to reach over $89-billion in 2015.
"Although customers are benefiting from declining call rates and innovative tariff plans, low calling rates are putting pressures on margins," says Nautiyal. "This is likely to result in consolidation in some of the markets like India and Sri Lanka."
India has the highest subscription growth rate, followed by Sri Lanka, Bangladesh, and Pakistan. Low penetration levels in South Asian countries are indicative of the huge untapped market and will translate into high subscriber growth rates in these countries between 2009 and 2015. Most of the increases will come from prepaid services.
"A high uptake of services such as MMS, mobile web browsing, call conferencing, call forwarding, call waiting, mobile banking, and access to other data services is enhancing the outlook for the mobile data services market," adds industry analyst Santosh Kumar Sinha. "The rollout of 3G services in some of countries is expected to further bolster market progression."
Israel, with 15% data revenue contribution, ranks first among the covered list of countries in the Middle East and North Africa (MENA) region, in terms of data usage. This is attributed to the difficulties of growth through new customer acquisition and voice tariff competition. Therefore, operators are focusing on mobile data and extending their services to provide bundled services.
Barring Israel, all other countries in the MENA region prefer prepaid subscription. New mobile operators are introducing services at low prices, especially in the prepaid segment, driving the growth of prepaid subscribers in these markets. Prepaid subscription is well accepted by all income groups, especially the low-income group, due to the low initial sign-up costs and flexibility in usage.
Intense competition has prompted participants to decrease tariffs, in order to acquire or maintain market share. To acquire subscribers, operators are launching new schemes and plans with low call rates.
"Leveraging larger economies of scale is vital for operators to stay afloat in the face of shrinking profit margins," says Nautiyal. "Telecom service providers in India are sharing towers and base station location sites, and this trend is expected to gain traction in few other countries as well."