High Expectations for Asia Pacific Mobile Prospects

The Asia/Pacific telecommunications industry will experience an increase in revenue in 2004, as service providers begin to move away from a focus on cost containment, and instead look to growth, according to Gartner. Gartner analysts attribute the change in attitude to better economic conditions, improving carrier fiancial performance, and a decline in price competition.

"This will not only to result in new service offerings, but it will also lead to the first growth in telecom investment in the region in five years," said Bertrand Bidaud vice president of Industries at Gartner Asia/Pacific.

In 2004, telecom investment is expected to increase 9% from 2003. One sector that will experience increased spending is in Next Generation technologies, bringing voice and data together on the same networks. Increasingly carriers in countries such as China and India, will move straight to Next Generation networks rather than deploy older style switched infrastructure.

Investment will also increase in supporting the rollout of new services such as new high-speed data and video services, but the results of these are unlikely to show through 2004 - and disappointments are likely as carriers struggle with new business models.

During 2004, the Asia/Pacific region will add another 125 million phone connections across fixed and mobile services, approximately a 13% increase from 2003 By the end of 2004, there will be 1.1 billion phone users in the region. But this subscriber growth will come at the expense of customer yields which will dampen revenue growth. Revenue growth across fixed and mobiles services combined in 2004 will reach about US$17.1 billion, a 7% increase from 2003.

In the mobile phone industry, China is one of the most vibrant market in the world. Gartner analysts forecast sales to exceed 70 million units in 2004. The market's sheer size will propel one of the leading Chinese handset vendors into the worldwide top vendor rankings in 2004.

The increased implementation of mobile phone connections will have an impact on the fixed line market. In developing markets, fixed-line carriers are struggling to compete with the explosion in the popularity of wireless or limited mobility wireless local loop services.

However, while there are many positive trends emerging for the Asia/Pacific telecom region in 2004, Gartner analysts said there will still be challenges.

"Some sectors of the industry, such as long distance and international will continue to feel the pain of over-capacity. The effect of a renewed focus on growth will be inconsistent, and it may not yet pay dividends for many carriers during 2004," added Andrew Chetham, principal analyst for Gartner's Asia/Pacific Telecom and Networking group."

Posted to the site on 22nd January 2004