Top 10 Telecom Markets: Asia

The Asia/Pacific region now forms one of the largest telecom markets in the world, and almost certainly the one with the highest growth potential in many areas of telecom. As Pyramid Research pointed out in its October 2008 "Asia-Pacific Market Perspective," the region comprises “50% of the world’s population and has a relatively low mobile penetration of about 48% in 2008... More than 1.2bn handsets were purchased around the world in 2007, up from 1.05bn in 2006, and 38% of that growth came from Asia.” Penetrations for handsets could easily reach around 70 percent over the next five years.

Of course, at the moment it is anyone’s guess how heavily the global economic problems will affect Asia’s telecom markets, and there are already some signs that China’s mobile growth is slowing. (See Trouble in Old Shanghai?) But the sheer scale of the region’s economic activity, population, and development potential will ensure that Asia continues to become more and more important to global telecom.

The telecom center of gravity is largely moving to Asia. (See Does the US (or EU) Matter Anymore?) Once, the EU/North America combination dominated the world’s telecom markets. But by 2007, they accounted for only 33 percent of fixed lines and 20 percent of wireless ones, according to International Telecommunication Union (ITU) statistics.

Asia's growing reach
Not surprisingly, the international ambitions of some of the region’s operators are growing. Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY), for example, aims to be the leading regional ICT (information and communications technology) solutions provider among telcos in five years as part of its transformation, begun a couple of years ago, from being a provider of just pure "carriage" services. Another island-based telco, Taiwan’s Chunghwa Telecom Co. Ltd. (NYSE: CHT), formed two subsidiaries in Japan and Singapore in mid-2008 to apply for local telecom service licenses in these major regional hubs in order to expand its global reach.

In February 2008, India’s Tata Group – the country’s largest private industrial conglomerate – launched a new company, Tata Communications Ltd. , that integrates, among others, the former VSNL and Teleglobe brands. Tata Communications was to invest $2 billion over the next three years in its global expansion, and would leverage the assets it acquired from Tyco (the Tyco Global Network – now re-named the Tata Global Network, or TGN) and its experience of operating in emerging markets in Asia and Africa.

And the high operator interest in the region is also working in reverse, as demonstrated in late 2008 when the European operator Telenor Group (Nasdaq: TELN) announced that it was taking a 60 percent stake in Unitech Wireless, a startup Indian mobile operator with licenses in all 22 of the country’s telecom circles. Telenor said it saw gaining access to the world’s second largest mobile market as a “major achievement,” although subsequent issues over the financing of the acquisition have yet to be resolved. (See Telenor Takes Mobile Stake in India.)

Earlier in 2008, private-equity firm Kohlberg Kravis Roberts & Co. (KKR) agreed to invest $250 million in Bharti Infratel, which will provide passive infrastructure services to all wireless telecom operators in India. It owns over 20,000 sites and holds an approximately 42 percent stake in Indus Towers, a recent joint venture among Bharti, Vodafone UK , and Idea Cellular Ltd. , which has more than 70,000 sites. KKR’s action followed a $1 billion investment in the company by Temasek Holdings Pte. Ltd. , The Investment Corporation of Dubai (ICD), Goldman Sachs, Macquarie, AIF Capital, Citigroup, and India Equity Partners (IEP) in December 2007.

This report aims to capture something of Asia’s unique combination of size, operator activity, and growth potential through some selected data tables, together with some topical information and comment on aspects of the region’s telecom market evolution. It provides a ranking of the region’s separate markets by various key parameters, and also focuses on some key growth opportunities.

The data is supplied by Pyramid Research, a market research and advisory service company that's now part of the Light Reading Communications Network. Pyramid analyzes and forecasts demand for communications and media services, applications, networks, and devices in more than 100 countries, with a strong focus on developing markets.

Future editions of this report will update, replace, or extend the data tables as appropriate.

Here’s a hyperlinked contents list:

• Page 2: Markets, Services & Definitions
  
  
• Page 3: The Big Spenders
  
  
• Page 4: The Greatest Potentials
  
  
• Page 5: Operators, Infrastructure & Services I
  
  
• Page 6: Operators, Infrastructure & Services II
  
  
• Page 7: IPTV & Fiber

— Tim Hills is a freelance telecommunications writer and journalist. He's a regular author of Light Reading reports.

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