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APAC mobile connections to hit 4.2 billion in 2016: Ovum

Asia-Pacific (AP) mobile connections will reach 4.2 billion in 2016 a compound annual growth rate (CAGR) of 6.4 per cent over the next five years, according to Ovum.

In a new report, the independent telecoms analyst states that mobile connection growth will largely be driven by the "mega emerging markets" of China, India and Indonesia due to their market size and relatively low mobile penetration levels. In fact these three markets will have 3 billion connections between them in 2016, accounting for 72 per cent of connections in AP and 38 per cent of the global total.

However, mobile revenue growth in AP will reach a CAGR of just 2.4 per cent between 2011 and 2016. This is despite the rise of mobile data revenues for telecoms operators, which Ovum expects to reach US$145 billion in 2016 due to the sheer volume of connections and the presence of a number of developed data markets.

Emeka Obiodu, Ovum senior analyst and author of the report, commented: "The global mobile market will experience sustained growth in connections across all regions, but Asia, Africa and the US will be the main drivers and between them will add billions of connections by 2016".

"However, the significant growth in subscribers and the market's insatiable demand for data services will not be enough to reverse the trend of overall slowing revenue growth in the market as the downward spiral in voice revenues continues to take its toll."

According to Obiodu, the developed markets of Asia-Pacific** have similar connection growth rates to Western Europe. With the exception of Australia, Singapore, and Hong Kong, all of the developed markets in AP have a lower connection CAGRs than their emerging market counterparts.

Obiodu commented: "This is unsurprising as these markets are made up of countries that have a non-existent prepaid market (South Korea and Japan) or that will have a penetration rate of over 130% in 2016. In addition, all of these markets have low population growth rates. In these markets, some of the main drivers of connection growth (pent-up demand, population growth, and multiple SIM ownership) are absent, while connection growth is stifled by market maturity".

Although voice will continue to play the major role in service revenues, accounting for 60 per cent of total mobile revenues in 2016, Ovum predicts that voice revenues will begin to decline in 2014 and will fall from $195.2 billion in 2011 to $193.7 billion in 2016 in AP.

"From 2014, voice revenues in AP will begin to decline as operators struggle to derive new revenues from customers and the significance of the market's shift towards data becomes even more apparent. In 2016, non-voice revenues will no longer be a supplement to voice revenues. Instead, they will begin to replace them", concluded Obiodu.


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