World Is Flat- At Least in Telecom!

22 09 2009

In the recent report published by Telegeography, which says Vodafone no longer holds the No.1 position in Wireless revenues anymore and is overtaken by China Mobile (Or rather China Mobile Communication Corporation), who is now at top spot. Are you taken by surprise?

Of course not! The juggernaut of China Mobile was evident when in June-09 it claimed to have 501 million wireless subscribers, which till date itself is a record. If you go by subscriber count, then China Mobile surpassed Voda long back in 2002, and now is way ahead of its rivals Voda & America Movil, which had 315 million and 190 million subscribers in the belly, at the same date.

How did this happen? Actually Vodafone still relies on W.Eurpoe market for majority of its revenues and which also commands very high ARPU (4 times as that of Voda’s China Operations) for Voda. But then China Mobile’s runaway subscriber growth has actually compensated the negative impact on revenue of low ARPUs, relative to Vodafone. The analysts also say that China Mobile’s market will continue to grow at 10% rate, as compared to W.Europe’s 2% growth rate. Though Vodafone has tasted fair amount success in its India operations, it will continue to rely on revenues from W.Europe’s market, which is growing at a slower rate. So in short, we are likely to see China Mobile actually consolidating its position in coming years, whereas Voda will continue to trail behind.

For rest of the others (6 of them), majority of them had already consolidated their positions in local Wireline Markets like AT &T etc, who will continue to lead the tally in total Telecom Operations revenue along with strengthening their wireless presence.

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Some facts & figures of global telecom industry growth!

13 06 2009

Recently I came across some facts & figures which shows that recession has dampened the growth of telecom sector worldwide . But yes, there is silver lining to my statement. India & China are notable exceptions of the fact. Here are some highlights of Telecgrography’s GlobalComm survey:

  • The Top 20 global service providers generated USD251 billion in revenues during the first three months of 2009; 3% up on Q108 but 1% down on Q408
  • The Top 10 telecoms technology vendors generated USD59 billion in revenues during the quarter; 5% down from Q108 and a whopping 15% down from the last quarter
  •  Wireless subscriber additions in the quarter fell off the pace a little as 153 million net new subscribers were added, 10 million fewer than in Q408
  •  No less than 48% of Q1 wireless growth came from India and China which enjoyed an exceptional quarter; growth slowed in many other markets with Western and Eastern Europe being particularly slow
  •  Countries like France, Germany, Italy, Poland, Ukraine and the UK were all essentially flat in terms of mobile user growth, or even in slight decline
  •  Broadband subscriber additions during the quarter came in at 14 million, in line with Q408 additions. China accounted for 30% of global growth; the US was the only other country to add more than 1 million subscribers in the quarter

Is it a bad news? Not actually, though Q4 is supposed to be the most important cycle of market sales, you often find that Q1 has dropped sales figures at start. We don’t have to be panic; it’s just cyclic nature of market.

What’s the reason for dampening of growth? There are two reasons; first one is global recession which has actually hit all industries equally and second, the near saturation of developed market. Earlier where 6% growth figures are well measured in developed markets, Telegeography predicts that for next five years growth will reduce to only 3.5% on an average. Top 20 service providers will see y-o-y growth of 3%, which will come from M&A and not from organic growth. The best organic growth performance came from Vodafone, China Mobile & America Movil.

The biggest hit in the quarter was clearly on the telecoms equipment vendors, service providers and enterprises alike. Huawei, Samsung, RIM and LGE had at least some cause to be pleased with their Q1 revenues, while Nokia, Cisco, Motorola and Alcatel-Lucent will be struggling to take any good news from theirs. Bottom of the class Nortel, meanwhile, dropped out of the Top 10 ranking altogether.