FOCUS: Asian Carriers Eye Data Revenue Growth From 4G Network

By Lorraine Luk
Of DOW JONES NEWSWIRES
TAIPEI (Dow Jones)–Asia’s major mobile operators are moving to launch a fourth-generation wireless technology known as long-term evolution, as they look to boost stagnant revenue and tap into booming demand for data services with the popularity of smartphones and tablet devices.
Japan’s NTT DoCoMo Inc. (DCM), South Korea’s SK Telecom Co. (SKM) and KT Corp. (KT), as well as Telstra Corp.’s (TLS.AU) Hong Kong unit, CSL Ltd., are investing billions of dollars to upgrade their networks to LTE, a technology that promises faster data downloads compared with third-generation wireless technology.
LTE has already made headway in Europe and the U.S., with Swedish telecom operator TeliaSonera AB launching commercial services late last year, and U.S.-based Verizon Wireless offering services starting this month. While analysts say there are near-term challenges for carriers in adopting the new technology, mobile operators say investments in LTE is important for their future growth.
“With the increase of data-related devices such as smartphones and tablet PCs, data usage from individual and corporate customers will grow as well, creating a greater need for high capacity networks, such as LTE,” said SK Telecom spokeswoman Lauren Kim.
Market research firms forecast data revenue will continue to grow in the coming years, making it more necessary for operators to upgrade to a faster network to handle excess traffic. London-based research firm Ovum forecasts global mobile data revenue to rise 10% to US$1 trillion in 2015 from US$906.82 billion this year. By contrast, global mobile voice revenue is expected to fall 8.4% to US$607.91 billion in 2015 from US$663.36 billion this year.
NTT DoCoMo, Japan’s biggest wireless carrier, is spending Y300 billion (US$3.63 billion) to upgrade its network to LTE over three years. Chief Executive Ryuji Yamada says DoCoMo will offer a new data communication service using LTE in Japan on December 24. The company would be joining CSL which has already launched commercial LTE services in Hong Kong last month by investing HK$523 million (US$67.4 million) for spectrum and network.
DoCoMo’s Yamada said he expects the number of LTE subscribers to reach 15 million by its fiscal year ending March 2015. The company had 56.9 million subscribers at the end of October.
“With the rise in data revenue driven by smart devices, we expect our aggregate average revenue per user to rebound in fiscal 2012,” said Yamada.
SK Telecom, South Korea’s biggest wireless operator, plans to commercialize LTE services in the second half of 2011 in Seoul, and help establish a nationwide network by 2013. KT spokesman Lee In-won said he expects investments in LTE will help boost the firm’s profitability long term. KT, South Korea’s biggest fixed-line operator, plans to invest KRW1.67 trillion (US$1.48 billion) in an LTE network from 2011 through 2014. The company said its rollout of LTE services would be in 2012.
Still, some analysts are skeptical about the merits of an upgrade.
“Having a lot of bandwidth doesn’t necessary translate into ARPU (average revenue per user) growth,” said Bill Rojas, an analyst at research firm IDC. “It will take a few years to judge the effectiveness of a (data-driven) new business model.”
A thin line-up of 4G mobile devices will also hinder the growth of LTE data services, some say.
“Handset availability will be the most crucial factor,” said Jayesh Easwaramony, an analyst at Frost & Sullivan. Having an “LTE network alone will not improve profitability.”
-By Lorraine Luk, Dow Jones Newswires; 8862-2502-2557;lorraine.luk@dowjones.com
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