BANGKOK, Thailand-Cellular and PCS operators in the Asia-Pacific region have doubled from 56 in 1993 to the current 113, according to the Yankee Group’s recently released “Asia-Pacific Wireless Series.” The research firm expects the region will house 184 million users or 34 percent of the global subscriber base by the end of 2002.
China and Japan will function as the region’s subscriber growth engines, having created 56 percent of total new subscribers in 1997. The other primary growth hot spots during the next five years will be South Korea, Indonesia, Taiwan and India.
The Yankee Group report has taken an in-depth look into the world’s most burgeoning region, classifying the countries into developed and developing groups.
All the developed markets have a high level of competition, illustrated by the declining market shares of incumbent carriers and leading to carrier consolidation and heavy churn, according to the report.
For developing nations, many carriers are facing future capacity constraints and remain financially challenged by the industry’s high cost structure.
Below is a summary by country of the report’s findings:
DEVELOPED GROUP
Australia
Measures for deregulation were approved in July 1997. Australian operators have been forerunners in the region in offering bundled fixed/wireless service packages.
A new regulatory authority, the Australian Communication Authority (ACA), was scheduled to issue a number of new licenses, both regional and national, in April-the first test of the country’s new regulatory regime. Australia’s 30-percent wireless penetration rate is the highest in Asia.
Hong Kong
The most competitive wireless market in Asia-Pacific, Hong Kong is expected gradually to change its focus from being a regional telecom hub to being China’s hub. With eight mobile phone companies, it is highly probable that more consolidation will occur within the coming months.
Japan
Despite economic recession, the market has continued its skyward trajectory throughout 1997, largely boosted by reductions in price during the past two and a half years.
Cuts in cellular airtime rates and the cellular carriers’ larger footprints have been stronger differentiators than voice quality. PHS (Personal Handy Phone System) technology generally is clearer than PDC (Personal Digital Cellular) technology. But PHS’s registration has dropped since last October.
IS-95 CDMA networks will launch in 1999, but PDC will continue as the dominant standard for the foreseeable future.
Malaysia
Malaysia has not been immune to the economic pitfalls that have ensnared Indonesia and Thailand.
The more important trend seen emerging in Malaysia is direct competition between its cellular and fixed service operators as unwinding regulations allow each the flexibility to penetrate new markets.
Singapore
Singapore Telecommunication Ltd. is 82 percent owned by the government and will retain its basic service monopoly until mid-2000.
The Telecommunications Authority of Singapore has announced one or two licenses for facilities-based service set for tendering by mid-1998 along with two additional mobile licenses.
Its paging penetration, nearly 40 percent, gives the country the highest concentration of paging users in the world.
DEVELOPING GROUP
China
With US$680 GDP per capita, there only is a limited portion of the population who can afford service in China.
Although China Telecom is in theory separate from the regulator-the Ministry of Posts and Telecommunications (now the Ministry of Information Industry)-in practice, the distinction remains as murky as ever.
Still, no foreign ownership is allowed. But foreign vendors make fortunes. Certainly China’s 1.2 billion population and 1-percent penetration infer enormous potential for future wireless growth.
India
India’s impressive GDP growth unfortunately has not been mimicked by India’s telecom sector. After agreeing to pay steep fees for licenses (US$4 billion pledged in total), many cellular operators are overextended and in financial trouble.
The government is considering extending the payment period. Consolidation of players is likely.
Indonesia
The privatization of the incumbent state-owned operators (PT Telekom and PT Indosat) is likely for the near future. (The government, since this report was written, has announced a US$43 billion rescue package negotiated with the International Monetary Fund that includes privatization of state-owned telecommunications entities.)
Unlike other markets, cellular has been categorized as a basic telephony service, due to the country’s geographical characteristics (13,000 islands).
Indonesia could potentially have 24 different networks, but will it have the capacity to absorb as many telecom services?
The Philippines
The Philippines regulator’s policy to have mobile and international gateway licensees install fixed-line networks in unprofitable areas has had a positive impact on public switched telephone network diffusion, which is up from 2.09 percent at the end of 1995 to 5.6 percent currently.
The regulator has finalized tender guidelines for nine to 12 personal mobile telephone service licenses, to be awarded in the middle of this year.
Cellular fraud has been an acute problem, which was reported to have cost US$43 million in 1996.
Thailand
Thailand’s track record of consistent high growth with low inflation abruptly crashed in 1997. The country most likely will require several years to begin recovery. The intertwined relationship of politics in the telecom sector continues to be a problem.
The award of new wireless licenses will be delayed until at least 1998-potentially longer.
