NEW DELHI, India-Countries in Asia and Southeast Asia specifically hit by economic crisis in the late 1990s are on the recovery path, paving the way for exponential growth in the wireless industry in the next two years. Early signs of this fast-track growth are already visible in Thailand, which was the epicenter of the economic quake that shook the region in 1997.
Mobile telephony markets in Southeast Asia are witnessing double-digit growth rates in most countries, with GSM penetration increasing exponentially regionally.
“Thailand, Indonesia and Malaysia are relatively mature GSM markets, where healthy penetration levels have been achieved,” observed Dr. Hans Wijayasuriya, chairman of the GSM Association’s Asia Pacific Interest Group. “These markets were only marginally affected by the East Asian crisis-mobile telephony and GSM in particular continued to grow.”
The Asia-Pacific region overall, including China, accounts for 26 percent of the global GSM subscriber base and is growing at the rate of approximately more than 3 million subscribers per month. There was a 50-percent GSM subscriber increase during 1998 and 1999 in Cambodia and almost 25 percent in Indonesia. In Thailand, companies have reported improved operating revenues in the second half of 1999, owing to progress in debt restructuring and growth in subscriber bases.
Handset and infrastructure vendors, too, are reporting bullish sentiments.
“This region has witnessed linear growth rates in the past three years for various reasons,” said Amit Sharma, general manager of strategic projects, Asia Pacific Consumer Solutions Group, for Motorola. “With more operators coming in and services becoming affordable, we will see exponential growth in the next two years. In a couple of years, wireless will be much ahead of wireline in this region.”
“The Asia-Pacific region accounted for 22 percent of Nokia’s net sales in 1999. Wireless markets are growing rapidly in all regions, and Asia is no exception to this trend,” added Nokia’s Chief Executive Officer Jorma Ollila at IT Asia 2000 in New Delhi.
Thai competition
In Thailand, Advanced Info Service (AIS), operator of the GSM 900 and NMT 900 mobile phone systems, has emerged as the country’s leading mobile operator, capturing nearly half the country’s 2.3 million subscriber base. In second-half 1999, it reported net gains of 884 million baht (US$23.5 million), mostly from the pickup of mobile-phone sales in the second half of 1999. AIS had about 1.2 million subscribers as of the end of the year, with 360,000 new subscribers, up from 200,000 new subscribers in 1998. In the third quarter of 1999, AIS added 80,000 subscribers.
Another Thai provider, Total Access Communication (TAC)-operator of Worldphone 1800 and Worldphone 800 mobile phone systems-posted third-quarter losses of 3.54 billion baht (US$94 million), but recorded a 19.3-percent increase in operating income. This mainly was attributed to rising revenues in its core mobile-phone business.
But the real challenge in Thailand comes from the metropolitan fixed-line carrier, TelecomAsia (TA), which finally launched its commercial Personal Communication Telephone (PCT) service in November 1999. TA first launched PCT service, which is based on CDMA wireless local loop (WLL) technology, almost two years ago, but did not charge a fee from its original 120,000 subscribers due to unsettled negotiation on debt restructuring with its major supplier, NEC. Now TA has cornered around 225,000 commercial PCT subscribers.
Industry observers say PCT provides direct competition to cellular operators in Bangkok. GSM operators have already reacted by slashing prices on their handsets to be close to PCT handset prices, which sell at around 6,000-7,000 baht (US$160-US$186).
GSM providers have launched aggressive promotion campaigns, giving new subscribers low air-time rates for up to two years.
At the same time, GSM operators said PCT is not a direct competitor because it can be used only in Bangkok city and lacks features like roaming.
Expanding options
Similar action is on the horizon in Indonesia, where CDMA wireless local loop (WLL) services are being introduced by two operators: PT Telekom and Komselindo. While PT Telekom will operate WLL service in Bandung and West Java provinces, Komselindo is deploying its services in nine areas, including Jakarta.
Another trend is the popularity of prepaid with GSM operators. Prepaid helped Telekomsel boost its subscriber base and triggered a wave in the industry, with others like Komselindo, Excelcomindo and Satelindo following suit.
The combined subscriber base of the three GSM operators in the Philippines reached close to 1 million in December 1999. One of the operators, Smart Communications, which launched services in April 1999, signed up 110,000 subscribers by year-end 1999.
In Malaysia, leading operator Celcom also touched a subscriber base of 1 million.
While positive signals are there, the policy and regulatory environments in the region need to be fine-tuned to sustain growth. “Governments are now understanding that given the speed of technological convergence, policies need to be rewritten to remove the artificial restrictions that the operators face today on the range of services they can offer,” said Motorola’s Sharma. “But, a lot needs to be done to enable a world-class range of affordable services to the end-user. Particularly in growing markets like India, where duties need to be cut sharply to reduce smuggling and make both cellular and WLL affordable.”
Regulation could be a key factor that will dictate future trends. “Broadly speaking, regulation in the region is very positive. The `openness’ of respective regulatory regimes is seen by the level of adoption of new services and concepts across the region, said Wijayasuriya of the Asia Pacific Interest Group. “I would draw a direct parallel with the situation in India where I trust it would be fair to say that the regulatory regime has been one of the factors which restricted growth and rapid proliferation of services.”
