Tata AIG General Insurance Company - Insurer Innovation Award 2024
Global cellular market trends
1. Wireless Intelligence
Global cellular market trends and insight
Q4 2012
December 2012
wirelessintelligence.com • info@wirelessintelligence.com • twitter.com/wi
1
2. 55+63+54+69+60+7565++ 80+71+84+75+87+79+90
47 +82
Global wirelessintelligence.com
High-speed networks now account for more than 25% of connections 9 120%
Market penetration
• World cellular connections in Q3 2012 reached 6.40 billion; in Q4 2012 we
Connections (billion)
estimate the quarter closed at 6.54 billion 8
• Connections in the developing world passed the 5 billion mark in Q3 and 100%
7
now comprise almost four fifths (78.9%) of the global total
• 3G/4G technologies now make up more than a quarter of global 6 80%
connections
5
60%
First LTE Advanced network goes live in Russia 4
• There were 50 network launches during Q4 2012, of which 32 were LTE
• (including one LTE Advanced), five DC-HSPA+, nine HSPA+, one HSDPA 3 40%
and three WiMAX 2
• There are now 134 live LTE networks worldwide, including seven TD- 20%
LTE, three LTE with VoLTE, one AXGP and Yota’s (Scartel) LTE Advanced 1
network in Russia
0 0%
2009 2010 2011 2012 2013 2014 2015 2016
Rapidly increasing mobile data use helping to drive economic growth
• Ericsson estimates that total smartphone subscriptions will reach 1.1 billion
9+69+1912c7+523074c
by the end of 2012, and expects them to grow to 3.3 billion in 2018
• According to the vendor, global monthly mobile data traffic doubled
between Q3 2011 and Q3 2012 to reach around 900 PB, and is expected Technology split
1% 2%
to grow with a CAGR of around 50% from 2012 to 2018, a 12-fold increase
• Research produced by the GSMA, Deloitte and Cisco indicates that 9% 4% 7%
7%
doubling of mobile data use leads to an increase of 0.5pp in a country’s
19%
GDP per capita growth rate
• Ericsson observed that at the end of 2012, the average mobile PC uses
around 3 GB of data per month, compared to 450 MB per month for a
2012 2016
smartphone 30%
• The vendor says that WCDMA/HSPA now covers more than 50% of the
world’s population, up from 45% in 2011, and that by 2017 an estimated 52%
85% of people will have the opportunity to access the internet using
WCDMA/HSPA 69%
Quarterly forecast accuracy
• Our estimates are replaced during the quarter by the actual results CDMA (Family) GSM WCDMA (Family) LTE (Family) Other
reported by the operator and regulatory community
• The delta between our estimates at the beginning of the quarter and the
actual results for Q3 2012 stood at just -0.35%
2
4. Africa wirelessintelligence.com
LTE close to commercialisation in South Africa Insight: Foreign investment in Africa rising, further opportunities in the
pipeline
South African operators’ LTE plans accelerate
• Vodacom South Africa’s LTE network was officially switched on; during the While their two largest competitors, MTN and Vodacom, plough ahead with their
quarter it expanded coverage from 70 to more than 500 base stations LTE rollout plans, rumours continue to circulate around the future of the two
• MTN South Africa announced the commercial rollout of its LTE network, smaller South African mobile operators 8ta (Telkom) and Cell C (Oger Telecom).
with over 1,600 base stations already upgraded Bharti Airtel is said to be interested in acquiring either mobile operator. This
• 8ta and Neotel are currently conducting LTE trials; both are planning to would further boost the group’s African presence following its acquisition of
launch a commercial offering next year Zain’s African assets, and would potentially provide funds for a more aggressive
• Cell C has also started LTE trials, however it will not launch a commercial LTE rollout for the operator concerned.
service until the “government finalises its position on a national wholesale
LTE network” However, within South Africa the messages appear mixed. In October, the
government turned down KT’s (South Korea) offer to buy a 20% stake in Telkom,
A tough quarter for governments and regulators while outgoing CEO Nombulelo Moholi has rejected the possibility of any tie–up
• Egyptian telecoms entrepreneur Naguib Sawiris has launched a $5 billion between Cell C and 8ta, stating that the Telkom Board was not looking at any
legal claim against the Algerian government for acting unlawfully in its kind of deal.
dealings with Djezzy
• The award of the third Senegalese mobile licence to Expresso is under Despite this reluctance, Communications Minister Dina Pule has hinted that a
investigation to ascertain whether there were irregularities in the process revised strategy for Telkom could include possible partners in terms of both
• Netherland British Company (NBC) successfully challenged the award fixed line and mobile operations. She has presented a number of options aimed
of 3G licences in the Democratic Republic of Congo to mobile operators at helping to turn the group around, with the government’s recommendations to
Airtel (Bharti Airtel), Tigo (Millicom), Vodacom and Africell (Lintel) be made at the ANC’s conference in late December.
• The Kenyan regulator (CCK) is to be disbanded and replaced by a regulator
that is free of government and commercial influence as part of the Aside from South Africa, a number of deals point to an inflow of foreign investment
Independent Communications Commission of Kenya Bill 2011 in Africa’s telecoms sector. In October Viettel Group purchased a 65% stake in
EGOTEL Tanzania – which is thought to be launching a 3G network soon - as
Countering the use of fake handsets part of a plan to invest up to $338 million in the country. Furthermore, November
• UCC, the Ugandan regulator ordered the country’s mobile networks to start saw investment firm Capcom spend $210 million on a 90.5% share in a merged
blocking counterfeit mobile phones from 30th November Nigerian entity, comprising MTS First Communication’s spectrum licence as well
• The Kenyan Government’s directive to ban ‘fake’ mobile handsets took as Starcomms and Multi-Links’ CDMA business.
effect at midnight on 30th September, beginning with the disconnection of
around 845,000 counterfeit handsets from the networks of Safaricom, Airtel In October, Vimpelcom announced its intention to dispose of several of its
(Bharti Airtel), yu (Essar Telecom), and Orange (Telkom Kenya) businesses in Africa (and Asia) as part of a rationalisation of its global business.
Initial reports indicate that its sub-Saharan African units in Burundi and the
Central African Republic as well as its Zimbabwean business will be sold. In
addition, December saw Vimpelcom reach an agreement with the Algerian
government to acquire a 51% stake in Djezzy.
4
6. Americas wirelessintelligence.com
Still room for growth with almost half of Latin Americans unconnected Insight: Oi in pole position as Brazilian operators firm up LTE rollout plans
América Móvil driving connections growth from Mexico down to Argentina Following on from the 2.5 GHz spectrum auction that took place in June, the
• In Q3 2012, 147 operators witnessed positive quarterly net additions past three months has seen all four major operators in Brazil set out their LTE
totalling 11.0 million connections, while 9 operators recorded losses of plans. With the country set to host the world’s two largest sporting events
658,000 in total within the next four years – the football World Cup in 2014 and the Olympic
• The largest gain was recorded by Claro (América Móvil) in Argentina with and Paralympic Games in 2016 – and given the coverage problems that some
1.4 million net additions, followed by Vivo (Telefónica) in Brazil and Telcel mobile users in Brazil have faced in recent times, there is additional pressure on
(América Móvil) in Mexico with 1.1 million each the operators to provide sufficient capacity for high-speed mobile broadband
• We expect slightly higher growth of 2.2% or 14.7 million net additions in usage by millions of Brazilians and tourists alike. Regulator Anatel has set a
Q4, when Mexico will pass the 100 million connections mark deadline for commercial launch of LTE in a number of cities by April 2013, ahead
of the Confederations Cup – a prelude to the World Cup – taking place in June.
Central and South America show high levels of multiple-SIM use
• Our research indicates that while there were 671 million connections in the Fourth-largest operator Oi looks set to be first with LTE services, promising a
region (excluding North America) in Q3 2012, only 91.8% or 616 million of commercial launch in Rio de Janeiro before the end of 2012. Oi, which has been
these were active conducting LTE trials in the city since October, has selected Ericsson, Nokia
• While connections penetration currently stands at 111.0%, unique Siemens Networks (NSN) and Alcatel Lucent as vendors and plans to extend
subscriber penetration is just 51.6% or 312 million subscribers the network to cover 50% of the population in seven cities by the April 2013
• This is due to mobile subscribers in South and Central America having target. Third-placed Claro (América Móvil) is also conducting an LTE trial in Sao
an estimated 2.00 SIM cards each on average, compared to 1.56 in the Paulo, having already undertaken trials in three other cities, and looks set for a
Caribbean commercial launch in six cities ahead of the deadline. Ericsson has been the
equipment supplier in each of those trials.
More high-speed mobile broadband networks emerging across the region
• Movistar’s (Telefónica) LTE network went live in Mexico in October Meanwhile, market-leader Vivo has selected Ericsson to install 2,700 LTE base
• América Móvil’s Telcel brand also launched its LTE network in an initial nine stations, principally in the North and mid-West of the country, and Huawei to
Mexcian cities in November, offering six LTE-compatible handsets, while install a further 2,000, mainly in South and Northeast Brazil. Ericsson and Huawei
the group’s Claro operation in Puerto Rico also debuted the technology will also act as vendors for TIM, alongside NSN. With the only half the amount of
• In Q4 HSPA+ networks went live in Colombia, Trinidad and Tobago and spectrum in the 2.5 GHz band as Vivo, TIM is also looking to launch LTE in the
British Virgin Islands via Movistar (Telefónica), bmobile (TSTT) and Digicel longer-range 450 MHz band to improve coverage in rural areas of the country.
respectively
Despite Oi having the early mover advantage, we expect its larger rivals to have
Smartphone revolution spreads across Brazil and beyond caught up in terms of absolute LTE connections by the end of 2014, although
• Smartphone penetration at TIM (Brazil) doubled year-on-year, from 19.5% the technology will still be in its infancy at that time, accounting for less than 1%
in Q3 2011 to 39% in Q3 2012 of total connections. However, we expect this proportion to increase to 8.7% or
• Meanwhile rival Vivo (Telefónica) reported that 78% of new contract 31.1 million connections by 2017, split broadly equally across the four operators.
customers in Q3 opted for smartphones, compared to 55% a year ago
• In Panama, Mas Movil reported smartphone penetration of 26% in Q3
2012
6
8. Asia wirelessintelligence.com
Data services in Asia offsetting ARPU declines Insight: Smartphone adoption accelerates in China
Rapid 2G to 3G/4G technology migration In December, Apple announced that China Unicom and China Telecom sold
• As of Q4 2012, 20% of mobile connections in Asia are running on 3G over 2 million iPhone 5 handsets in the first three days of availability. The two
networks, an adoption rate almost on par with the global average of 24% operators are aggressively launching new smartphones in order to compete
• Western Asia averages the highest 3G adoption in the region with 36% with market-leader China Mobile, which is yet to launch a version of the latest
of its connection base on 3G, compared to 30% in Eastern Asia, 21% in Apple device compatible with its TD-SCDMA network. Interestingly, according
South-Eastern Asia, and only 6% on average in Central and Southern Asia to Chinese web services company Baidu, 16.1% of smartphones in China
• Meanwhile, LTE contributes 2% of connections in Eastern Asia in Q4 2012 earlier this year (Q1 2012) were counterfeit models, while 26.2% had come from
driven by demand in South Korea (28% of connections), Japan (7%), unbranded vendors.
Hong-Kong (1%) and Taiwan (0.1%)
• Sixteen operators have launched (FDD) LTE networks in Asia between China Unicom expects to sell 140 million 3G phones next year, company officials
January and November 2012, compared to only 2 TD-LTE networks have said. The operator claims almost 50% of China’s 3G market, having sold
over 70 million 3G phones as of early December 2012. Overall, around 190 million
Data services help to stabilise ARPU trends 3G mobile devices will be sold this year in China, up 73% year-on-year. China
• Since the launch of 3G services in India two years ago, blended ARPU has Unicom is currently expanding its 3G network to improve rural and suburban
gradually stabilised at around $2.50 by mid-year, offsetting the declining 3G coverage to around 78% of population in these areas from its current 39%,
trend observed since 2006 whilst also strengthening capacity in urban areas.
• Also in India, data ARPU at Bharti Airtel increased from $0.72 to $0.79
between Q2 and Q3 2012, while it increased from $0.86 to $0.91 at Idea China Telecom reported that smartphones accounted for 30 million connections
Cellular over the same period as of June this year, with smartphone penetration (as a percentage of 3G
• Similar trends have been recorded in the Philippines and Indonesia where subscriptions) greater than 60% in the first half of 2012. The operator has
blended ARPU is stabilising at around $4 adopted a 3G smartphone driven strategy with a priority placed on affordable
• In Malaysia, data ARPU increased on average by $0.30 between Q3 2011 smartphones priced at around $160. China Telecom further stated that its focus
and Q3 2012 at Celcom (Axiata), DiGi and Maxis, who recorded data ARPU has largely been on “cultivating customer habit in data usage” through the
at $4.02, $2.18 and $5.07 respectively in Q3 2012 launch of compelling devices such as the iPhone, along with an increase in
• Similar trends have been observed in Thailand as AIS, DTAC (Telenor) and specialty stores and customer assistance on applications.
True Move (True Corporation) recorded an average $0.40 increase in data
ARPU between Q3 2011 and Q3 2012, the three operators reporting data As demand for smartphones and data devices accelerates in China, operators
ARPU of $1.13, $1.06 and $0.9 respectively in Q3 2012 are seeing substantial increases in data traffic. China Unicom reported that the
• Meanwhile in Turkey, Turkcell and Vodafone averaged a yearly $0.35 average monthly data traffic per 3G handset user was 138 MB by June 2012,
increase in data ARPU in Q3 2012 to reach around $1.50 on average, while compared to 111 MB at China Telecom. Meanwhile, China Mobile’s data traffic
Avea (Turk Telekom) recorded a $0.85 increase in data ARPU over the increased by 188% year-on-year in Q3 2012, including a major boost in its Wi-
same period to $2.20 Fi traffic. The operator’s mobile Wi-Fi revenues surged by 139% between 1H11
and 1H12, while earlier this year (Q1 2012) it was reported that 61% of its entire
mobile data traffic was carried over Wi-Fi (84 PB/quarter).
8
10. Europe wirelessintelligence.com
Europe accounts for almost half of all global LTE networks Insight: 3 Austria gets green light for Orange acquisition
8.3m net additions in Q3 due to strong growth in South and East In February 2012, 3 (Hutchison) announced that it had reached an agreement to
• During Q3 2012 connections grew by 0.8% to 1.01 billion, equivalent to buy Orange Austria from its owners – private-equity firm Mid Europa Partners
136% population penetration – the highest across all regions (65% ownership) and France Telecom (35%) - for EUR1.3 billion. In December
• 158 operators witnessed positive quarterly net additions totalling 12.9 2012, the European Commission finally approved the acquisition.
million connections, while 25 operators lost a cumulative 4.6 million
connections Following extensive negotiations with the EC, 3 has committed to give up
• Russia saw the largest customer gains with a total of 2.4 million net spectrum to any new entrant that should emerge in Austria, and allocate 30%
additions; MTS (Sistema) added 1.1 million connections, MegaFon of the new company’s capacity to wholesale access for 16 MVNOs over the
744,000, Tele2 710,000, Rostelecom 595,000 and Beeline (VimpelCom) next ten years. The operator has already inked an MVNO agreement with cable
442,000 thanks to promotional offers, retail presence expansion and operator UPC Austria, which will come into effect after the takeover. 3 Austria
mobile broadband growth has also signed a deal with A1 to sell up to 64 base stations and 2 x 13.2 MHz of
paired frequencies - as well as intellectual property rights to Orange’s previous
LTE is gaining ground across Europe with 57 LTE networks in place brand, One, and its youth-focused prepaid brand, Yesss! - for EUR390 million.
• Between October and December 2012, 19 operators launched LTE This sub-deal has received the go ahead from regulator TKK and the Austrian
networks in 13 countries, including France, Italy and the UK Cartel Court.
• In Q3 2012, there were 2.4 million LTE connections; Russia, Germany and
Sweden together accounted for 73% of the region’s LTE connections The transaction would merge third-placed Orange and fourth-placed 3 to create
a powerful number three behind A1 and second-placed T-Mobile. Based on Q3
Smartphone adoption displays no signs of slowdown data, the deal would create a combined entity with 3.8 million connections and a
• Vodafone’s smartphone penetration across its European footprint was 31% 29% market share, however the disposal of Yesss! (around 700,000 connections)
in Q3, up from 22% last year, while Telefónica’s reached 33% in Q3 (25% will result in 3.1 million mobile connections and a 23% market share. On the
Q3 2011) other hand, the Yesss! takeover strengthens A1’s position, increasing its share
• Ofcom reported that 58% of the UK population owns a smartphone; as of of connections from 40% to 46%.
Q3 Vodafone UK boasted the country’s highest smartphone penetration at
50%, followed by O2 (Telefónica) with 44%, and EE (FT/DT) at 38% The Austrian market is not only saturated (160% population penetration) but also
• In Spain, Movistar (Telefónica) and Vodafone each had 7.1 million installed well advanced, with 3G connections accounting for 60% of total, and three out
smartphones, translating into 34% and 44% penetration respectively of four operators having deployed LTE networks (Orange being the exception).
• German operators still lag behind their Western European counterparts in 3’s aggressive customer acquisition strategy - fuelled by its competitive data
terms of smartphone penetration, with O2 and Vodafone reporting 24% offers - helped to maintain market share and increase data revenue to 49% of
and 28% respectively its ARPU. 3 claims that this deal will allow it to hasten LTE deployment, and
• A number of Eastern European operators reported healthy quarterly compete better with other market players.
smartphone volume growth: O2 Czech Republic showed a 10% increase in
its installed base to reach 29% penetration, T-Mobile Hungary was up 7% The deal, if it goes through, could set a precedent for similar takeovers across
to reach 25%, Orange Poland increased 12% to 19% penetration and MTS Europe, bringing in a new wave of M&A activity.
Russia was up 8% to 18%
10
12. Northern America wirelessintelligence.com
Data boom continues thanks to growing LTE coverage and device sales Insight: Sprint, T-Mobile eye up further spectrum as US market consolidates
LTE coverage expands rapidly as Verizon’s deployment almost complete October 2012 saw the most significant amount of merger activity in the US
• AT&T expanded its LTE coverage to 160 million people in December, and mobile industry for several years, with the announcement of T-Mobile USA
plans to increase this to 250 million by end-2013 and 300 million by 2014 and MetroPCS’ merger quickly followed by Sprint’s agreement to be majority
• Verizon’s LTE network now covers 250 million people, and the operator acquired by Japanese operator SoftBank. The T-Mobile/MetroPCS deal will
expects to complete rollout by mid-2013, six months earlier than planned consolidate the former’s position as the country’s number four player with
• In Canada, Rogers Wireless reported that its LTE network covered 60% of 12.2% of total connections (on a pro-forma basis). While the merger will give the
the population at the end of Q3 2012 combined operation a strong position in the value end of the market with 20.8%
of the country’s prepaid connections, the resulting synergies should also allow
Operators reporting big data increases on the back of LTE it to compete more successfully with AT&T and market leader Verizon on LTE.
• Verizon announced that 35% of its overall data traffic travelled over its
LTE network at the end of Q3 2012, and the operator expects that in a few This can be achieved through combining the operators’ AWS spectrum in the
months’ time the majority of its traffic will be transmitted over LTE 1700/2100 MHz bands (in which MetroPCS already provides LTE for 1.1 million
• MetroPCS reported that subscribers to its unlimited data plans use customers), an action which T-Mobile CEO John Legere claimed would “…
between 2 GB and 2.5 GB per month on its cellular network increase our contiguous spectrum for LTE by 40%”. Specifically, in 2013 the
• Since launching LTE in July 2011, Rogers Wireless (Canada) has seen an new entity would begin to move MetroPCS customers off that operator’s CDMA
80% increase in data usage, and expects traffic to grow six-fold by 2016 network and onto T-Mobile’s new LTE network in the AWS spectrum, as well
as its re-farmed 1900 MHz HSPA+ network. Around 60% of MetroPCS’ CDMA
4G smartphones gain popularity while T-Mobile cuts device subsidies customers are expected to be migrated over to the T-Mobile networks within a
• Smartphone penetration at Verizon increased from 39% in Q3 2011 to 55% year, and the network is likely to be shut down and the spectrum re-farmed in
in Q3 2012; the operator sold 4.5 million LTE devices during Q3 2012 2015 - by which time the LTE deployment across the combined AWS spectrum
• Sprint (Sprint Nextel) revealed in October that it had sold 1 million LTE should be complete.
smartphones prior to the launch of the iPhone 5
• US Cellular reported that half of the smartphones it sold in Q3 were 4G Meanwhile, Sprint has secured funding to continue its network upgrade
• T-Mobile (Deutsche Telekom) confirmed that it will eliminate all device programme through SoftBank’s $20.1 billion investment, of which $8 billion will
subsidies during 2013 – from then on customers will have to pay the full be new capital. The operator has set about securing new spectrum for its own
device cost up front, purchase by instalments or supply their own devices LTE deployment, agreeing a deal with US Cellular (TDS) to purchase spectrum
and connections in the Midwest and entering into talks with Gamma (Dish
Shared data plans exceed operators’ expectations Network) over further spectrum holdings. However, Sprint’s biggest move has
• AT&T gained 2 million subscriptions to its ‘Mobile Share’ data plans within been to agree a $2.2 billion deal to buy the 48.3% it does not already own of
five weeks of launch, with more than a third opting for 10GB or larger plans WiMAX operator Clearwire, which holds as much as 150 MHz of spectrum in the
• Verizon reported that 13% of its customer base are on its ‘Share 2.5 GHz band.
Everything’ data plans, using an average of more than 2.6 devices per
contract While both mergers remain subject to regulators, approval is widely expected to
• On a similar basis, Verizon now reports an average revenue per account be granted early next year given that both deals will put the respective operators
(ARPA) metric, which was up 6.5% year-on-year in Q3 to $145.42 in a stronger position to compete with the top two players in the market.
12
