Mobile will connect the next billion Internet users, but at what cost?

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Friday, 01 March 2013 09:19

“Emerging markets continue to feature heavily in the keynote speeches at MWC 2013, with both Nokia and Bharti Airtel’s CEOs highlighting that the next billion Internet connections will come from mobile users in emerging markets.


“Ovum forecasts that emerging markets will be the key source of future mobile connections growth, particularly in Africa and Asia-Pacific. Between 2012 and 2017, Ovum expects that there will be 1.6 billion new mobile connections across the world, with 61% of these coming from Asia-Pacific. While connections growth in Asia-Pacific will begin to slow towards the end of our forecast period, the region’s 4.4 billion connections in 2017 will make it the greatest contributor to global connections. Growth in the Asia-Pacific region will largely be driven by the “big three” emerging markets of China, India, and Indonesia, which will have 3 billion connections between them in 2017.

“While Asia-Pacific will generate the most new connections, Africa will be the fastest-growing region. African mobile connections will grow at a compound annual growth rate of 6.5% between 2012 and 2017, increasing from 683 million in 2012 to 935 million in 2017.

“While connections growth is important, the biggest issue for emerging market operators will continue to be around revenue growth and how to remain profitable with a customer base of low-ARPU users. Both Nokia and Airtel’s CEOs talked about the need for cheaper devices (as discussed in our comment Nokia CEO outlines mobile Internet strengths in emerging markets). The strategies of operators in Vietnam, India, Pakistan, and Tanzania demonstrate how telcos can operate in markets where ARPU is below $3 per month. While the correlation between high ARPU and profitability is not absolute, operators still need to take action to improve the amount of revenue that they make from each connection. This is of paramount importance to operators in markets where ARPU will be less than $5 per month in 2017.”

 
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