According to research of Frost & Sullivan, North Asia is light years ahead of all other Asian sub-regions in terms of mobile service innovation and revenues, especially due to countries like Japan and South Korea. Both nations account for the highest average revenue per user (ARPU) levels in Asia-Pacific, with Japan at US$53.20 per month and South Korea at US $38.04 in 2008. However, “many of the markets in Southeast Asia are still low ARPU markets” says Frost & Sullivan industry analyst Shaker Amin, highlighting that for instance, ARPUs in markets such Cambodia, Indonesia and Vietnam, which have high percentage of prepaid users, would be less than US$10 per month. Amin explains further that a high prepaid subscriber concentration and low-yielding ARPU indicate users’ low propensity to spend on premium content applications. Hence, in most Southeast Asian markets, despite the high market penetration, revenue generation is still likely to be driven by voice and text messaging.”

Despite such heavyweights and market saturation [Japan - 110.4 million (12.6 percent); South Korea - 45.6 million (5.2 percent); Taiwan - 25.6 million (2.9 percent); and Hong Kong - 9.3 million (1.1 percent)], it will be the juggernaut China that ensures a continuing mobile subscriber growth in Asia. The Asian region is expected to be home to just over one billion mobile users by the end of 2009, representing a year-on-year subscriber growth of 15.3 percent, whereby China alone will answer for around 80 percent of that billion.

Frost & Sullivan’s 2009 Southeast Asia Wireless Outlook states that the mobile subscriber base in the region - covering seven Southeast Asian nations - grew 36 percent year-on-year to reach 383 million users in 2008, for a corresponding mobile penetration of 72.5 percent and estimates SEA’s mobile subscribers will reach 606 million, growing at a compound annual growth rate (CAGR) of eight percent (2009-2014). The region’s mobile services grossed an estimated US$28.3 billion in revenues in 2008, and are forecasted to reach billings of US$36.2 billion by end-2014, at a CAGR of 4.2 percent (2009-2014).

The diversity of SEA markets means that growth will be driven by a mix of subscriber net additions of consumers in the rural districts, many of whom will receive mobile connectivity for the first time as networks continue to expand beyond major urban areas, as well as the increase in data usage and higher-end services brought on by 3G. Amin explains, “In saturated markets like Singapore and Malaysia with mobile penetration already at 131 percent and 97.8 percent respectively, growth, although marginal, will largely be fuelled by user migration to 3G, mobile broadband uptake and generally, the higher consumer appetite for mobile content and data services.”

“Enabled by faster network speeds, users will be able to enjoy a wide range of content services such as streaming TV, location-based services, real-time multiplayer games, and other multimedia services”, he believes. “On the other extreme, growing markets like Cambodia, Vietnam, Indonesia and the Philippines, with mobile penetration well below 75 percent and even lower fixed broadband penetration, are likely to see growth in new subscriber additions,” he says, adding that these users are predominantly low-ARPU (average revenue per user) prepaid subscribers. With 3G entering many new markets such as Vietnam and Thailand, the mobile broadband market in the Southeast Asian region will enter a new phase of growth.

Still, Amin believes that mobile usage in these growing markets will continue to be dominated by voice and basic text messaging services, stating: “Although 3G will be making its entry into many of these markets it will still take some years before 3G services become commonplace.” Only about six percent (22.9 million) of SEA’s total mobile users last year were 3G subscribers.

Asked why he believes that it will take so long, he explains:” Except for a few markets such as in Hong Kong, Singapore and Taiwan, prepaid subscribers dominate in most other Southeast Asian markets. As most users are prepaid price-sensitive customers, mobile usage continues to be dominated by simple voice and text messaging.  Hence, even the take-up of Internet-ready phones is still low (less than 25 percent of subscribers). And in markets such as Vietnam, 2G network expansions still continue to be a major investment driver as operators are focusing on providing services in rural areas.

The race to roll-out 3G services in the hugely competitive growing markets however shows no signs of abating. Cambodia, Indonesia, Thailand and Vietnam - each have no less than six mobile operators; Indonesia the most with eleven. “As operators compete fiercely to enrol new subscribers, 3G will be the technology to eventually deliver [mobile] broadband to the rural communities that are not likely to ever receive fixed broadband access,” concludes Amin.

By Daniela La Marca