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Global Wireless Data Market 2006 Update Chetan Sharma Consulting

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Title: Global Wireless Data Market 2006 Update Chetan Sharma Consulting


1
Global Wireless Data Market 2006 UpdateChetan
Sharma Consulting
2
Global Wireless Data Market 2006 Update
  • In 2006, mobile data industry grew across every
    geography. From the true and trusted SMS
    messaging to new services such as Mobile TV, LBS,
    and others, different services helped in adding
    billions to the revenues generated for the year.
    Japan and Korea remain the envy of the global
    markets and the countries to study and learn
    from. The US market has been steadily making
    strong comeback and is soon going to become the
    biggest mobile data revenue generating market in
    the world. Chetan Sharma Consulting conducted its
    bi-annual study on the global mobile data
    industry. We took a look at wireless data trends
    in over 40 major countries - from developed and
    mature markets such as Japan, Korea, UK, and
    France to high-growth markets such as China,
    India, Brazil, and Russia. The study also took a
    detailed look at over 30 prominent operators.
    This note summarizes the findings from the
    research.
  • 2006 was a great year for mobile data. Revenues
    from mobile data were up in all major regions and
    for all major carriers with data contributing
    double digit percentage to overall revenues in
    most cases. The overall subscriptions rose to
    approximately 2.7B and we should be crossing 3B
    by the end of 2007. The wireless industry is on
    its way to gain the quickest billion subscribers
    within the next 3 quarters.
  • Japan led the way with almost 20B in annual
    mobile data revenues. US and China were next with
    15.8B and 9.2B respectively.
  • NTT DoCoMo became the first carrier to cross the
    10B barrier for a given calendar year amassing
    10.5B for 2006 in data revenues. The Japanese
    market was followed by China Mobile at 6.9B,
    KDDI at 6.6B, Verizon Wireless at 4.5B, and
    Cingular Wireless at 4.3B. They were followed by
    Sprint Nextel, SK Telecom, Softbank, O2 UK, and
    China Unicom to make up the top 10.
  • A majority of countries we tracked got double
    digit growth in mobile data ARPU except for a
    handful of countries which registered a decline
    from EOY 2005. Some of the prominent ones being
    US (33), Czech (40), Brazil (32), Netherlands
    (31), UK (20), and Japan (14). Japan
    registered the largest dollar amount increase
    with 2.08 increase from 2005 levels. US and UK
    data ARPU levels grew by 1.72.
  • In 2006, SMSs vice like grip on data revenues
    loosened a bit with many carriers seeing an
    increase in non-SMS data revenues. On an average,
    Japan and Korea have over 70-75 of their revenue
    coming from non-SMS data applications, US around
    50-60, and Western Europe around 30-40.
  • 2006 was a great year for mobile data. Revenues
    from mobile data were up in all major regions and
    for all major carriers with data contributing
    double digit percentage to overall revenues in
    most cases. The overall subscriptions rose to
    approximately 2.7B and we should be crossing 3B
    by the end of 2007. The wireless industry is on
    its way to gain the quickest billion subscribers
    within the next 3 quarters.

3
Global Wireless Data Market 2006 Update
  • The top 10 carriers increased their revenue by
    13 during the second half of 2006 to reach an
    aggregate amount of 46.8B for the year in data
    revenues.
  • In terms of data ARPU, Japan continues to lead
    the pack with almost 30 of its revenues coming
    from data services amounting to almost 17 data
    ARPU. Ireland, Norway, Switzerland, UK and South
    Korea also registered significant data ARPU. US
    crossed the (5, 10) block, where 5 is the data
    ARPU and 10 represents the share of overall
    ARPU. As of Dec 2006, US stood at (7, 13). For
    detailed US Wireless Market update, please see
    "US Wireless Data Market Update 2006" (For more
    details, please refer to the 9-box diagram in the
    ppt for 2005 comparative numbers, please refer
    to our paper from last year titled Perspectives
    Wireless Data ARPU)
  • NTT DoCoMos position at the top of the wireless
    data world has been challenged recently by
    several carriers esp. by its archrival KDDI which
    surged past DoCoMo and remained ahead pretty much
    for the entire year. Their data coordinates stand
    at (17, 31) and (17, 30) respectively.
    However, it is 3 UK that is inching towards (20,
    30) mark with 26 in data ARPU contributing over
    29 to its overall ARPU. 3 Italy with (16, 35)
    is also amongst the leaders.
  • The biggest contribution by data ARPU has been
    consistently registered (since mid 2002) by two
    Philippines carriers Smart Communications and
    Globe Telecom with almost 50 (or 3)
    contribution coming from data services.
  • Even though China reported approximately 9.2B in
    data revenues, and the contribution is over
    20, data ARPU is around 2, confirming what we
    already know its a volume game. For India data
    ARPU is just under 1. Approximately same for
    Brazil and Russia. Actually, in 2006 the overall
    wireless service revenue for US was two times the
    overall revenues of the four BRIC (Brazil,
    Russia, India, and China) countries combined. So,
    lessons are pretty clear as to which markets to
    approach for what products and services.
  • In terms of overall ARPU, it has been a mixed
    picture compared to 2005. Of the 40 countries we
    looked at, it was an even split, with half of the
    countries registering increase in overall ARPU
    while the other half were at the same level or
    experienced decline in ARPU. US, China, and India
    all registered declines while Japan, Russia,
    Italy, UK, and Canada had an uptick in their ARPU
    numbers.
  • All the carriers in the top 10 wireless carriers
    by wireless data revenues list exceeded 1B in
    data revenues for the second six months of 2006
    and 2B for the year.
  • Western Europe officially crossed the 100
    wireless subscriber penetration mark (primarily
    due to multiple SIMs and double reporting) with
    several nations reporting up to 140 subscriber
    penetration. US crossed the 75 penetration mark.
  • The top 10 carriers increased their revenue by
    13 during the second half of 2006 to reach an
    aggregate amount of 46.8B for the year in data
    revenues.

4
Global Wireless Data Market 2006 Update
  • China crossed the 400M subscriber market in 2006
    and is on its way to cross the 500M mark this
    year. However, its growth rate was overtaken by
    India which is experiencing tremendous growth.
    Its net-adds approached 7M subs/month compared to
    6M/month for China (though in March 07, monthly
    net-adds dipped below 4M probably due to the
    pressure from the government to prove the
    reported numbers). India crossed Japan and Russia
    to stand number 3 behind China and US and is
    going to get past US in terms of total number of
    subscribers by 2008.
  • As expected, China Mobile is way ahead of the
    second ranked Vodafone w.r.t total number of
    subscribers. China Unicom, América Móvil,
    Telefonica, SingTel, Deutsche Telekom (T-Mobile),
    and Orange (France Telecom) are the next six
    largest telecom groups in the world. In terms of
    individual carriers, Cingular and Verizon now
    occupy the 3 and 4 spot respectively ahead of
    NTT DoCoMo, which is at 5. The two Chinese
    carriers round up the top two positions and are
    likely to stay perched at their lookout vistas
    for some years to come. Telecom groups in mature
    markets are under enormous pressure to either
    come up with a global expansion strategy or
    accelerate their existing plans. Carriers in
    Japan and Korea are the most under duress.
  • Japan became the first nation to have more than
    50 of its subscribers using 3G. DoCoMo and KDDI
    have 60 of their subscriber base using 3G
    devices. Korea is close second approaching 50 3G
    penetration. 3G is starting to pick-up steam in
    both western Europe and North America per our
    discussion in the cover story article 3G
    Hitting the Mass Market published in Wireless
    World Magazine. US and Western Europe crossed the
    10 mark for 3G penetration (Italy stayed ahead
    with over 25 of its subscriber using 3G phones).
    The difference between 2G/2.5G/2.7G and 3G is
    palpable, for example, for DoCoMo the difference
    FOMA (3G) and mova (2G) was approaching 200.
  • China and India represent the biggest
    opportunities for Infrastructure providers. China
    has postponed its 3G decision for the umpteenth
    time and is having technical and political
    problems to get something in place before the
    2008 Olympics. India is going through its 3G
    spectrum policy but unlike China is likely to
    resolve the issues in short order. Some of the
    biggest infrastructure contracts will come from
    these two countries that are looking to expand
    coverage.
  • Carriers with nationwide 3G networks and good
    distribution of handsets are seeing uptick in
    data ARPU. The Japanese and Korean carriers along
    with operator 3, Verizon, Sprint Nextel are all
    seeing benefits of rolling out their 3G service.
    Deployment of 3.5G technologies such as HSDPA and
    EV-DO Rev A (and B) are also gaining momentum.
    Networks are getting deployed and market is being
    seeded with some of the early handsets.
  • In terms of applications, messaging accounts for
    lion-share of data revenues. However, other
    services such as Mobile Music, Mobile TV and
    video streaming, Mobile Games, IMS, LBS, Mobile
    advertising, and others have captured industrys
    imagination. Though not much talked about,
    enterprise applications are also being adopted
    widely esp. in North America as more workers
    become mobile and corporations seek efficiencies
    in their operations and supply-chain.
  • China Mobile overtook Vodafone as the most valued
    telecom operator in the world which in turn was
    surpassed by ATT though China Mobile is likely
    to get its title back within a few quarters.

5
Wireless Data ARPU in different global markets
(2006)
6
Wireless Data ARPU of major global carriers (2006)
7
Penetration in Developed Wireless Markets
8
Data ARPU trends in Developed Wireless Markets
(2001-6)
9
Top 3 nations Wireless Data Revenues (2006)
10
Monthly Net Adds India vs. China
11
Top Carriers by Wireless Data Revenues
12
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