Top 10 Emerging Mobile Markets 2007

A rundown of the Top 10 emerging mobile markets ranked by the number of customer additions made in 2007

April 30, 2008

13 Min Read
Top 10 Emerging Mobile Markets 2007

Emerging markets are firmly in the driver’s seat when it comes to global mobile growth, and in 2007 that growth accelerated as the top 10 racked up hundreds of millions of new subscribers.

Last year, the 10 developing countries that registered the most new subscribers gained a combined total of 320 million. That was 35 million more than in 2006, when the top 10 added more than 285 million new customers. (See Top 10 Emerging Mobile Markets .)

By contrast, the world's mature markets are now so saturated that even if the ranking was open to them, too, only one, the U.S., would have made the cut.

The 2007 ranking, shown in the table below, has shifted somewhat from last year. While Ukraine – in 6th place last year, now down in 15th – and Nigeria – 9th in 2006, but now 13th – dropped off the list, Iran and Egypt made the cut thanks to the launch of new operators during the year. On a broader scale, the introduction of those countries to the ranking reflects accelerating mobile customer growth in the Middle East. (See Who Does What: Middle East Carriers.)

Table 1: Top 10 Emerging Markets by Mobile Subscriber Growth

Ranking

Country

Subscriber Additions in 2007 (in millions)

Total Subscribers Dec 2007 (in millions)

% increase over Dec 2006

2006 ranking

1

China

86.22

547.3

18.7

2

2

India

84.01

233.63

56.15

1

3

Indonesia

29.31

92.94

46.06

5

4

Pakistan

28.59

76.88

59.2

3

5

Brazil

21.06

120.98

21.08

7

6

Russia

20.95

172.87

13.79

4

7

Vietnam

12.68

35.18

56.33

10

8

Bangladesh

12.61

34.37

57.95

8

9

Iran

12.43

28.51

77.3

--

10

Egypt

12.06

30.07

67.02

--

Total

319.92

1372.73

25.03





China and India are once again far ahead of the pack, though this time China has claimed the top spot, boasting 86 million additional mobile subscribers compared with India’s 84 million.

The bottom end of the Top 10 ranking is even tighter, as positions 7 to 10 each added between 12 and 13 million new mobile subscribers last year.

Just off the list was Mexico: If we had been doing a Top 11 it would have propped up the table with 11.22 million new mobile subscribers.

At this point it's worth noting that exact subscriber counts are hard to come by for countries whose regulators have not released statistics, so some calculations have been made based on aggregate carrier data.

So here's the rundown of the top 10 mobile growth markets (outside the U.S.) that registered the largest increases in new mobile subscribers in 2007:

— Nicole Willing, Reporter, Light Reading

Next Page: Egypt

Egypt (population: 81 million) has claimed the tenth spot with a 2007 subscriber growth of 12.06 million. That gave it a total base of 30.07 million and the second highest percentage growth of our Top 10 markets at 67.02 percent.

A combination of high economic growth and low mobile penetration has made for ripe pickings in the Middle East’s most populous nation.

As with Iran, it was the launch of a new operator during the year that propelled subscriber growth.

United Arab Emirates-based Etisalat entered the market in May 2007 and had racked up 3.1 million subscribers by the end of the year. Etisalat and Vodafone Egypt both launched 3G services in May, while the country’s other mobile operator, Mobinil , recently pushed back its 3G launch to July of this year.

Next Page: Iran

Iran (population: 71 million) made it onto the list in 2007 by adding 12.43 million new mobile subscribers in 2007, giving it a soaring subscriber growth of 77.3 percent and a total subscriber base of 28.51 million.

The growth was fueled by the introduction of a new operator, MTN Irancell , which launched its service in October 2006. Its subscriber numbers grew from 154,000 in December of that year to 6 million by December 2007, so it accounted for almost half of the country's total mobile additions.

MTN Irancell and Mobile Telecommunications Co., the mobile subsidiary of state-owned incumbent Telecommunication Company of Iran (TCI) , operate national networks, while Taliya , Mobile Telecommunications Company of Esfahan (MTCE) , and Telecommunication Kish Co. (TKC) run small regional operations. (See Who Does What: Middle East Carriers.)

The introduction of additional competition has driven down prices and spurred growth, helping the number of Iran's mobile phone users exceed its fixed-line subscriptions for the first time.

Next Page: Bangladesh

Bangladesh (population: 150 million) was the only country to retain its position in the Top 10, holding on to 8th place by adding 12.61 million new subscribers, taking the country's total mobile subscriber base to 34.37 million. In 2006, it added 12 million subscribers.

Warid Telecom Pvt. Ltd. became the sixth operator in the market when it launched in April 2007, and managed to sign up 2.15 million subscribers by the end of December.

Grameenphone is by far the largest operator, with 16.48 million subscribers. Co-founded by Nobel Peace Prize winner Muhammad Yunus, the carrier advanced the micro credit model by providing low-cost phones to poor rural users – mostly women – who rent mobile minutes to other villagers. (See GrameenPhone Hits 15M.)

In 2005 the Bangladesh government introduced a controversial tax on SIM cards that slowed growth and continues to be opposed by operators, particularly state-owned Telelink, which has been unable to subsidize new connections to the same extent as its private rivals in order to keep prices down and attract new customers. Telelink is the smallest of the six operators, with just 850,000 subscribers.

Next Page: Vietnam

In tenth place in 2006, Vietnam (population: 86 million) has squeaked into seventh place in our 2007 ranking with 12.68 million new mobile subscribers, just ahead of Bangladesh.

The country had 46.9 million phone subscriptions by the end of 2007, of which 75 percent were mobile. That gave it a mobile base of 35.18 million, an increase of 56.3 percent compared with 2006.

State-owned GSM networks MobiFone, VinaPhone, and Viettel Mobile compete fiercely on price and service quality, accounting for more than 90 percent of Vietnam’s subscribers. (See Redknee Visits Vietnam.)

CDMA-based operators HT Mobile , S-Fone, and EVN Telecom, meanwhile, are struggling to get a foothold in the market.

Hutchison’s HT Mobile launched a CDMA network in January 2007 with the goal of signing up 1 million subscribers by the end of the year. When it only reached half that, the carrier decided to switch to GSM and is now in the process of temporarily packing off its customers to CDMA operator S-Fone while it preps the new network.

Next Page: Russia

Russia (population: 141 million) dropped from fourth to sixth place in 2007, adding 20.95 million new mobile subscribers compared with 26.12 million the previous year.

Russia’s subscriber count demonstrates the shortcomings of using that number as a measure of telecom penetration – with mobile users often owning several SIM cards, Russia has 172.87 million subscriptions, giving it a mobile penetration rate of nearly 127 percent.

With Russia’s explosive mobile growth slowing, operators are looking to the Asia/Pacific region for further expansion. Conglomerate Sistema JSFC (London: SSA) is pumping millions of dollars into Indian mobile operator Sistema Shyam TeleServices Ltd. , in which it has acquired a controlling stake. (See Sistema Ups Shyam Stake and Russia's Sistema Buys Into India.)

Rival Vimpel-Communications (NYSE: VIP) is looking to invest in places such as Afghanistan, North Korea, and Vietnam. In September 2007 it made its first move outside the former Soviet states, signing a preliminary joint venture agreement with the Vietnamese Public Security Ministry to invest $1 billion in creating a new operator, GTel Mobile. (See VimpelCom Forms Vietnam JV.)

Next Page: Brazil

Latin America’s largest market, Brazil (population: 188 million) moved up from seventh place to fifth with a subscriber growth of 21.06 million, taking it across the 120 million mobile subscriber mark.

Somewhat surprisingly, the Brazilian operators turned around a decline in mobile growth in 2007, boosting subscribers by 21.08 percent, up from a 15.9 percent growth rate in 2006. Analysts had predicted the decline would continue in 2007 and had expected a growth rate of around 10 percent, but the market was boosted by market leader Vivo Participacoes SA , which surprised analysts with its best performance in two years following the launch of its GSM operations in January 2007. (See VIVO Reports Q4.)

Brazil's mobile penetration remains low compared with other Latin American countries, although it climbed from 53 percent to 64 percent during the course of last year.

The country’s four largest carriers – VIVO (owned by Telefónica SA (NYSE: TEF) and Portugal Telecom SGPS SA (NYSE: PT)), TIM Participacoes S.A. , Claro (América Móvil S.A. de C.V. 's Brazilian brand), and Telemar Group (NYSE: TNE), known as Oi – account for more than 90 percent of subscribers.

The number of operators in Brazil was reduced in 2007 with Vivo’s acquisition of Telemig and Oi’s purchase of Amazônia Celular. (See VIVO Buys Two Operators.)

Carriers have placed more than $1 billion in equipment orders following auctions for additional 2G spectrum in September and 3G spectrum in December.

Next Page: Pakistan

Pakistan (population: 165 million) was close behind Indonesia in subscriber growth in 2007, gaining 28.59 million additional mobile users to take its total subscriber base to 76.88 million.

That means Pakistan added roughly the same number of new mobile customers last year as it did in 2006, when it took third place in our ranking with 28.9 million new subscribers. That means that, in percentage terms, mobile growth has slowed quite considerably: In 2006 the growth rate was 147 percent, while in 2007 it was 59.2 percent.



Pakistan’s market is led by Mobilink , with 30.61 million subscribers, while Pakistan Telecom Mobile Ltd. (Ufone) , Telenor Group (Nasdaq: TELN), and Warid Telecom Pvt. Ltd. are jostling for second place. (See Telenor Pakistan Hits 15M.)

Paktel Ltd., acquired by China Mobile last year and rebranded this month as Zong , nearly doubled its customer base last year, from 1 million to 1.98 million. China Mobile invested $860 million in the operator in 2007 and plans to pump in another $800 million this year.

Last year the Pakistan Telecommunication Authority introduced a subscriber verification requirement that all mobile users should register their details with their operator, or their SIM cards would be blocked. So far 1.36 million accounts have been cut off this year, and that's a trend that will affect subscriber counts going forward.

Next Page: Indonesia

Indonesia (population: 235 million) jumped from fifth spot to third in the rankings, adding 29.31 million new mobile subscribers last year to reach 92.94 million – a year-on-year growth rate of 46 percent.

That growth reinforced Indonesia’s position as one of the key emerging markets for investment.

United Arab Emirates-based Etisalat acquired a 15.97 percent stake in PT Excelcomindo Pratama , the country’s third largest mobile operator, for $438 million in December. Telekom Malaysia Bhd. also holds a stake in the operator. (See Etisalat Buys Excelcomindo Stake.)

Hong Kong-based Hutchison Telecommunications International Ltd. (NYSE: HTX) launched 3G operations in Indonesia in April 2007, signing up 2 million customers by the end of the year. That triggered some price competition in the market, which is dominated by PT Telekomunikasi Selular (Telkomsel) , which has 47.9 million subscribers.

Malaysia’s Maxis Communications Bhd. and Saudi Telecom Co. (STC) hold stakes in PT Natrindo Telepon Selular, which is yet to launch its network. (See Saudi Telecom Invests $3B in Maxis.)

Next Page: India

In some ways, India (population: 1.1 billion), which added 84.01 million new mobile subscribers last year, has a mobile market similar to China's: Economic growth is driving telephone adoption; carriers are shifting their focus to rural areas, where the bulk of the population resides; ARPU is falling as poorer consumers sign up and tariffs fall; and the government is engineering a shakeup of the operators.

The Indian government has awarded new licenses and spectrum to existing operators and new companies planning to join the market, with the goal of boosting competition and telephone penetration, which should ensure mobile growth continues to accelerate. (See A Guide to India's Telecom Operators.)

The statistics show the percentage of subscriber growth has slowed as India’s subscriber base has grown in size – in 2006 operators saw a 97 percent increase in their total subscriber base as they added 73.56 million new subscribers, whereas in 2007 the increase was down to 56.15 percent, though that's still an incredible figure for any market that already has a significant body of users.

In recent quarters operators have been signing up more than 8 million subscribers each month, putting India, which ended 2007 with 233.63 million mobile users, on track to overtake the U.S., which had 255.4 million mobile users at the end of last year, as the world’s second largest mobile market. If India's growth rate persists, the country will end 2008 with more than 330 million mobile accounts. (See Indian Mobile Carriers Add 8.4M Subs and New Report Maps Out Indian Market.)

Next Page: China

The largest mobile market in the world, China (population: 1.3 billion) added 86.22 million new mobile subscribers in 2007, taking the country's total to 547.3 million by the end of 2007.

The rapid growth of the Chinese economy is driving a massive uptake in mobile services, with operators averaging, on aggregate, more than 7 million new subscribers every month.

China edged out India by just over 2 million to take pole position in our ranking, and easily beat the 67.68 million new customers that China Mobile Communications Corp. and China Unicom Ltd. (NYSE: CHU) added in 2006.

The Chinese carriers continued to focus on reaching out to rural areas to maintain the pace of subscriber growth as urban markets have become saturated.

China Mobile and China Unicom have also introduced lower tariffs that have helped poach fixed-line customers from China Telecom Corp. Ltd. (NYSE: CHA) and China Netcom Corp. Ltd. (NYSE: CN; Hong Kong: 0906). As a result, the average revenue per user (ARPU) rate is falling as the operators add more lower-margin customers.

The Chinese telecom market is set for a long-awaited major restructuring that could occur later this year, along with the introduction of 3G licenses. (See Major Carrier Shakeup Expected in China and Investments Line Up for Chinese 3G.)

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