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June 2015

Issue 109

Asia Pacific
BMI’s monthly market intelligence, trend analysis and forecasts for the telecommunications industry across Asia Pacific

Asia Pacific Risk/Reward Index –
Q3 2015
Minor improvements to the average Country Rewards and Country
Risks scores for the 28 countries surveyed as part of BMI's Telecoms
Industry Risks/Rewards Index are recorded this quarter. A number of
countries moved up or down the ranking table according to their changing economic, political and demographic fortunes, but those movements
are generally fairly limited. The most remarkable changes see China fall
four places to ninth position, while New Zealand climbs three places to
fifth place. Amended Industry Rewards scores were also recorded by
several countries this quarter as a result of market consolidation reducing
the number of effective players and heightened price competition that
continues to drive down revenues and profit margins.

Industry Rewards
The regional average score for Industry Rewards declined by 0.5 points
this quarter, to 43.7. Countries' Industry Rewards scores consider factors such as recent and forecast subscription and revenue growth in the
mobile and wireline voice and data markets, with ARPUs also used as a
guide for market headwinds. Eight countries had their Industry Rewards
scores downgraded this quarter as market saturation led to flat or negative mobile subscription growth while ARPUs were impacted by price
competition and/or the dilutive effects of bundling multiple low-value
products alongside higher value offerings.
China fared poorly in our latest assessments as certain operators
proved reluctant to disclose ARPUs for various reasons including, but
not limited to, the migration of customers to new 4G networks. Less
transparency in the reporting of key revenue streams, including mobile
data usage, also weighed on our view of the Chinese market. Operators'
profitability was also impacted by the high cost of building the new 4G
Neighbouring Mongolia lost five points this quarter, as mobile subscription growth was found to have stalled in 2014 and the expansion of
the wireline broadband market underperformed expectations. Few data
are available regarding the financial performance of Mongolia's telecoms
companies, but information disclosed by the regulator implies that price
competition caused ARPUs to decline last year.
Australia, which is the fourth most attractive Asian market overall,
also saw its Industry Rewards score decline, by 5.5 points, to 52.3. With
a mobile penetration rate of close to 132%, market saturation is expected
to weigh on growth momentum over the next five years. That said, the
mobile market demonstrated better than expected subscriptions growth
in 2014 as a whole, aided by consolidation amongst the smaller alternative wireline carriers, many of whom act as mobile service resellers
or virtual operators. The emergence of larger, more potent alternative
players creates more opportunities to sell mobile to a wider audience.

ISSN: 1750-7723

Asia Pacific Risk/Reward Index – Q3 2015............................................................... 1

Limited Impact On ICT From Trans-Pacific Partnership............................................. 4
Google's Project Fi Opens Up New Battleground...................................................... 6

Asia Will Be Nokia-Alcatel's Key Battleground........................................................... 8
Asia Fibre Market – Differing Speeds Of Light.......................................................... 9

Wireless Broadband Behind New Towers Paradigm.................................................12

Sponsored Data Insufficient To Drive Demand........................................................13
Spectrum Monetisation Pressure Weighs On Minor Players......................................14

Small Market Seeks Large Investor........................................................................14

Investments Unlock Malaysia's Data Centre Hub Potential.......................................15

New Zealand
CallPlus Deal Broadens M2's M&A Appeal...............................................................15

SMRT Lends Weight To Fourth Mobile Licensee.......................................................16
Cybersecurity An Important Segment For Diversification..........................................17

NTT Com Regional Expansion Goes Mobile.............................................................17
Sinoze Investment Fits AIS's Game Plan.................................................................18

Viettel Expansion Benefits Underperforming Markets...............................................19

Editorial Office:
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London EC4V 4AB, UK
Tel: +44 (0)20 7246 5126
Fax: +44 (0)20 7248 0467

2 69.0 68. New demographic data – including new information on population distribution.0 60.0 65.7 90. and indicative of Myanmar's long-term appeal as an investment destination.9 23 21 Nepal 37.0 70.7 80. April 13).8 7 9 Taiwan 50.3 70. Clearer market data from the regulator show that mobile and broadband subscription growth improved in 2014 versus 2013.7 35.7 38. We now have two quarters of data to analyse for Myanmar's two new mobile operators and uptake rates are within the ranges we had been expecting for a frontier market being exposed to very cheap services for the first time.0 79. Its Industry Rewards score increases by 7. of which Industry Risks 40% and Country Risks 60%.5 29.0 67. with the most dramatic improvement being the nine-point increase applied to Malaysia. Country Rewards The regional average score for Country Rewards improves by 1. 'Risks': 30%.0 80.0 80.9 26 25 Sri Lanka 35.0 64.3 4 3 New Zealand 47.3 64. is to be welcomed. whether it will do so remains to be seen (see 'Limited Impact On ICT From Trans-Pacific Partnership'.0 74.0 80.0 60.7 44.0 52. yielding a much more positive view of the country's potential with regards to adoption of advanced telecoms services.0 76. based on BMI's proprietary Country Risk Index that could affect the realisation of anticipated returns.0 21.6 20 23 East Timor 25.0 42.3 this quarter.0.0 22 24 Bangladesh 47.0 54. 'Rewards': 70%.0 60.9 63.0 45.8 16 15 Brunei 20.3 50.8 12 12 Philippines 45.0 46.5 63.0 50.0 57.0 38.8 36.0 68.9 =18 18 Vietnam 52. of which Industry Rewards 65% and Country Rewards 35%.7 46.0 65.4 17 16 Thailand 49. and country's broader socio-demographic characteristics that impact the industry's development.1 65.3 30.1 1 1 Singapore 47.0 69.3 60. the country is still a long way off from fulfilling its potential and there are still many risks and Telecommunications outright impediments to foreign investors working in the country. With actual ARPU figures now incorporated into our analysis and forecasting models. raising its score to 54.0 39. As a member of the Trans-Pacific Partnership (TPP). Q315   Country Rewards Risks   Industry Rewards Country Rewards Industry Risks Country Risks Telecoms Score Rank Previous Rank Japan 65.3.5 39.0 .0 90.6 2 2 Hong Kong 45.1 48. with 12 countries seeing amended scores in this category.8 63. Improvements were recorded by six countries.9 60.5 33.7 10 10 Indonesia 55.0 70.0 47.1 24 22 Bhutan 24.0 60.9 =18 19 Fiji 35.5 59. Vietnam's score improves by 2.0 58.7 51. the most notable are Myanmar and Vietnam.1 66.7 51.3 65.5 points to 52.5 80.0 65. our outlook for Myanmar is much brighter than before.1 50.0 80. However.1 - - Note: Scores are weighted as follows.7 60. Further consolidation in the mobile market diminishes consumer choice.0 50.0 68.1 36.3 27 27 Laos 27.0 30.5 32.3 33.0 81. Source: BMI 2 www.5 21 20 Myanmar 52. not least of which is the deep influence the state wields over mass media services.0 46. also above the regional average.3 80.0 70.6 15 17 Mongolia 32.8 61.0 30.0 65.9 42.6 51.3 42.6 63. the 'Risks' score evaluates industry-specific dangers and those emanating from the state's political/economic profile.7 60.7 28 28 Average 43.0 75.4 44.3 40.0 62.0 50.0 53.0 38.Asia Asia Of the four markets that recorded improvements to their Industry Rewards scores.2 46.1 60. particularly those that base their business models around unsustainably cheap voice and data services. Vietnam's government must take a less central role in the business sector.0 70.7 13 13 Pakistan 47.telecomsinsight. Although mobile and wireline Asia-Pacific Telecoms Risk/Reward Index. but the winnowing-out of underperforming players.3 14 14 Afghanistan 35. access to power. The 'Rewards' score evaluates the size and growth potential of a telecoms market in any given state.5 11 11 India 52.9 44.1 5 8 South Korea 52.8 points to 52.0 27.7 45. well above the regional average.4 3 4 Australia 52.0 70.0 66.3 45.7 9 5 Malaysia 50.5 32.0 25 26 Cambodia 35.6 8 7 China 63.5 72.0 50.0 46.0 70.2 53. including telecommunications.5 36.1 point to 51.5.7 60.3 42.9 6 6 Macau 42.0 90.8 59. allowing us to upgrade Vietnam's score.0 80.5 51.7 30.9 56.5 80.0 40. age ranges and consumers' disposable incomes – have been incorporated into our forecasting model.

This was the largest percentage point gap between revenues and expenditure growth on record.7 points. given the extensive economic linkages between the two countries. as operators are striving to encourage subscribers to make greater use of value-added services. New data show that GDP per capita has declined while the average age of the population has increased. Hong Kong and New Zealand. We are less sanguine on Malaysia's growth outlook in 2015. accounting for about 33% of total inflows in 2012 according to data from the World Bank. which should take the fiscal deficit to 5.0%. Indeed. India is a key source of remittances for the Nepalese economy. We are forecasting further progress in FY2014/15 as reform and privatisation measures roll on. marking a strong improvement on the 8.1 point this quarter. at 42. recorded a 3. this can make it difficult to sell advanced new products and services. This should concern operators investing heavily in advanced fibre-optic backbones and 4G mobile broadband platforms alike. from 3. Over the next decade the active population is projected to grow by 1.5% of GDP in the 2013/14 fiscal year. Malaysia performs relatively poorly. China. whose active population is projected to stagnate over the next decade. which is among the highest in the region. taking it to 80 points. It could be argued that the Commerce Commission is being over-zealous in its treatment of Chorus while it pursues diversity in the retail services arena. In line with consensus Asia Telecommunications reduction while the latter saw 10. Australia sees a 10-point increase to its score. As already noted. it may be necessary to mark down New Zealand's Industry Risks score in the near future.8 points wiped off its score. and is a clear sign that reform measures are bearing fruit. strong remittance inflows will remain supportive of private consumption growth (which accounts for about 80% of nominal GDP). This masks the fact that 16 markets had their scores revised. noting that government measures. this poses a moderate downside risk that must be considered when planning infrastructure or service-led investments in these markets. Ongoing efforts by the Laotian government to develop the hydropower and tourism sectors. this weighs on infrastructure owner Chorus ' ability to invest in advanced fibre-optic infrastructure as it is required to maintain its legacy copper access network in the interim. particularly when compared with Thailand. meanwhile. In both cases.6%. Country Risks The average Country Risks score for the Asia Pacific region fell by 0. while expenditure grew by just 4. We expect these economic gains to come mainly in the form of greater trade and inward investment flows from China and India over the coming years. The highest scoring countries continue to be Singapore. rural and urban alike.3 point reduction to its score.1% of GDP. Vietnam and Singapore are in a worse position in this regard). to 59.4% y-o-y. This compares with the IMF's estimate of 4. There has been an easing-off of economic growth in recent months and consumers' disposable incomes have been hit. we forecast real GDP to grow by 4. putting it on a par with Singapore and Macau. Persistent weaknesses in Malaysia's main trading partners will also weigh on growth. Mongolia's score declined by three points this quarter while that of Vietnam fell by 3. The former recorded a 4. the extent of their powers. Accordingly. non-messaging services and utilisation of broadband accesses for more than Internet browsing led to higher incomes from value-added services.  We believe stronger real GDP expansion in India (we forecast an acceleration of India's real GDP growth to 5. That said. this should result in slower real GDP growth over the coming decade (although it should be noted that Taiwan.6% in FY2014/15 [April 2014-March 2015] and 6. Perhaps the most notable of the downgrades were those applied to Malaysia and Pakistan. Malaysia's real GDP grew at a slower rate of 5. each recording 90 points. Total revenues surged by 22. Holding all other factors constant. putting it well below the regional average. when we compare active population growth over the next decade with that of the past decade.6% year-on-year (y-o-y) in Q314 compared to the previous quarter's 6. and attract Japanese manufacturing companies. new economic data showed that disposable incomes were now lower than before and. such as the implementation of new taxes and reduction of subsidies.5 points this quarter. should help Laos to garner greater foreign investor inter- 3 .telecomsinsight. as we expect military spending to increase in the wake of increased counter-terrorism efforts. of which seven were downwards in nature.Asia growth trends continue within expectations.3% in FY2015/16 from 4. That said.8% of GDP.8% for the full year. As a result. we have raised our FY2014/15 (July 16 2014-July 15 2015) real GDP growth forecast for Nepal to 4.2% y-o-y in 2015.0%. No changes were recorded for any of the 28 markets in our survey owing to the well-established regulatory regimes in developed markets.7%. Indonesia.6 points. Pakistan's fiscal position continues to improve. Industry Risks The regional average score for Industry Risks – which focuses on regulators. Being located in close proximity to both China and India.3 points. Two countries that saw significant improvements to their Country Risks scores this quarter were Nepal and Laos.0% of GDP deficit seen in FY2012/13. On a related note. We believe that the slowing money supply growth and weaker export demand suggest a further deceleration in Q414 and forecast real GDP growth to come in at 5. This will provide a natural tailwind to the economy.5% previously. consumption of mobile non-voice. the continued enhancement of industry policies in middle-tier markets and progress in transforming the regulatory regimes in frontier markets such as Myanmar. will lead to a reduction in disposable income.7% in FY2013/14) will yield a positive impact on the Nepalese economy over the coming years. as well as the degree to which they are free of government interference – remains at 64. justifying operators' investments in 4G and fibre-optic technology. both of which nevertheless remain at the lower end of the overall ranking table. Meanwhile. The Commerce Commission of New Zealand continues to amend pricing for physical infrastructure access in favour of the country's service providers. their inclination towards passivity or proactivity when encouraging investment or the development of new networks and services.3 point www. The country's robust economic performance led to an appreciable increase in disposable incomes while the rollout of the National Broadband Network (NBN) to rural areas and the consolidation of minor alternative wireline players brings advanced infrastructure and services to more Australians. Malaysia's demographics are in good shape. strong growth in data centre and the provision of cloud computing services shows that more businesses are leveraging the increased power of the country's telecoms infrastructure. Nepal will be able to reap substantial benefits from the improving economic growth prospects in India as well as the ongoing power struggle between Beijing and New Delhi for dominance of South Asia. The government ran a fiscal deficit of 5. As a result. we note that domestic political challenges and continued business environment weakness will continue to weigh on the pace of Nepal's economic development.

2014 Source: National sources. provided governments such as Vietnam are willing to accept these changes. software. and are forecasting real GDP growth to increase from an estimated 7. video. Singapore. global Internet. These three segments play a role in the TPP through the proliferation of a free. Provisions promoting choice of technology and competitive alternatives to address the high cost of international mobile roaming. IT and e-commerce have been identified by the TransPacific Partnership (TPP) as areas of focus for the 12 member states. New Zealand. music. e-books). as they look to encourage comprehensive market access and open trade to promote economic growth. Commitments to provide reasonable network access for telecommunications suppliers through interconnection and access to physical facilities. Source: BMI 4 www. More specifically. and. consistent with governments' legitimate interest in regulating for purposes of privacy protection. ensuring fair competition. Japan and Australia account for six of the 12 TPP members. Canada. BMI Vietnam The Outlier In Local Data Storage The TPP has a wide range of countries as member states and among them are some of the most advanced telecoms and IT markets in the world. we see the agreement as having limited impact across the board. bolstering our view that the economy will be able to sustain its current strong growth momentum over the medium term despite potential headwinds stemming from slowing mining sector growth and the country's poor fiscal health. In terms of the issues outlined above. Requirements that support a single. For the ICT sector. Global Limited Impact On ICT From Trans-Pacific Partnership BMI View: The introduction of the TPP is being hailed as a gamechanger for a number of different industries. Larger FDI inflows will improve Laos' economic growth prospects. Reducing trade barriers between countries. will also help to bring more foreign direct investment (FDI) inflows to Laos. with 100 highest. including ensuring cross-border data flows.4% in 2014 to . Non-discriminatory treatment of digital products transmit- • • • • Telecommunications Limited Telecoms Impact Among Developed Markets Mobile Penetration (%). Rules against localisation requirements that force businesses to place computer infrastructure in each market in which they seek to operate.telecomsinsight. We maintain our largely positive growth outlook for the Laotian economy. The 'Industry Risks' score evaluates industry-specific dangers and those emanating from the state's political profile.Global Asia est over the coming years. ted electronically (as a result of nationality or territory in which the product is produced).   Telecoms. which will generate more trade and investment opportunities in the region. However. Ongoing Association of Southeast Asian Nations (ASEAN) economic integration. open and competitive internet boosting the global economy. the US. reducing the influence of state-owned enterprises and improved intellectual property (IP) procedures are all on the agenda for these sectors in the member states. some of the telecoms-related TPP provisions outlined by the Office of the US Trade Representative include: • • Commitments not to impose customs duties on digital products (eg.6% in 2015. we note a few instances where the TPP could have a tangible effect. as most markets  involved in the TPP are already undergoing widespread development. however. these states already subscribe to these views Vietnam The Laggard Country Industry Risks Australia 70 Brunei Darussalam 65 Canada 90 Chile 90 Japan 80 Mexico 65 Malaysia 70 New Zealand 90 Peru 60 Singapore 90 United States 90 Vietnam 30 Note: Scores out of 100.

especially when governments show clear favouritism or protectionism towards SOEs. we expect this to be a point of contention in progressing further TPP plans. with multiple interconnection. our view is that these countries want more control over anti-government material online and these measures allow them to put pressure on internet companies based abroad. online publication of material that 'opposes' the Vietnamese government or 'harms national security'. Only Yahoo? has established a local office in Vietnam and Facebook is reportedly banned as a result of Decree 72.000 www.Global Asia and are committed to a global Internet. the TPP seeks to prohibit anticompetitive business conduct. Therefore. While keeping their citizens' data out of the hands of US government agencies is a motivation behind local data storage. Mexico And Peru Internet User Growth Drives E-Commerce 5-Year Internet User CAGR (%).com 700. This may prove to be a sticking point in discussions and both the US and Vietnam have shown an unwillingness to compromise on issues so far. however.telecomsinsight. which would boost growth of the internet sector.000 China Japan USA 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 0 2003 Vietnam is the major outlier here. In particular. 2014-2019 Japan Singapore Canada Vietnam New Zealand Australia United States Chile Malaysia Brunei Darussalam Mexico Peru 0% 2% 4% 6% 8% 10% Telecommunications Telecoms State-Owned Enterprises A Minor Concern The TPP will also have an impact on competition policy and stateowned enterprises (SOEs) in telecoms sectors. Brunei and Malaysia also hold stakes in key companies such as SingTel and Telekom Malaysia.000 200. the aim is to force Facebook. These basic rules are applicable to a handful of states involved in the TPP. hold dominant positions in the provision of mobile. There is less evidence to suggest that governments in these markets actively favour the state-owned incumbents. in particular for small enterprises looking to promote their business and attract customers. so the impact would be a lot smaller than in Vietnam. forcing it to do so may be more difficult as we believe the state will be unwilling to remove its censorship procedures and invite anti-government content. BMI Governments in Singapore. With plans already underway to address problems of unfair competition. with healthy competition and minimal government interference. stands out among these as one of the most forwardlooking telecoms and IT markets in the world. South Korea Source: WIPO. allowing the Vietnamese government to request data from Facebook. respectively. E-Commerce Booming With Or Without TPP The proliferation of the Internet has huge economic ramifications for markets. which passed Decree 72 in July 2013. MobiFone. the law also requires foreign internet companies to keep their local servers and customer information inside Vietnam.000 500. as well as ensuring that the private sector is able compete on fair terms with SOEs. the governments of these two markets have attracted new players to the markets to improve competitive dynamics and in the case of Mexico. The same is largely true of the other six. roaming and digital trade agreements already in place.   Allegedly. less developed markets. Google and Twitter on bloggers and writers to enforce censorship of material to store customer information within the country. for example. Moves are underway to privatise VinaPhone but there will remain a strong government presence in the sector and similar to laws on local data storage. as most have fully liberalised and privatised telecoms sectors. Google and Twitter to store customer information within Vietnam. China Threatening International Patent Standards Total Patents Filed By Country. Over the past two years. have instituted a market share cap of 50% on América Móvil's Telcel and Telmex units. Rescinding the law would presumably be a requirement for Vietnam to join the TPP. Chile. while we see little impact from these provisions for the vast majority of TPP members due to their current compliance. 2003-2013 Source: BMI 800.000 300. This section of the TPP looks to enhance e-commerce activity by removing various impediments and 5 . scoring at just 30 out of 100 in BMI's Telecoms Industry Risk Index. the TPP will again have limited effect in these markets. there is scope for wide-reaching change in Vietnam. fixed-line and broadband services. Vietnam in particular is one of the markets where the government has an overwhelming presence through ownership of stakes in VinaPhone. prohibiting discussion of current affairs.000 100. Vietnam scores the lowest by far of the 12 TPP member states independence of the regulator and overall government involvement category. Viettel and Vietnam Posts and Telecommunications (VNPT).000 400. More importantly.000 600. where Telefónica and América Móvil. allowing the Vietnamese government to request data on bloggers and writers to enforce censorship of material. We also highlight Peru and Mexico as markets with competitive concerns. It was the first to enshrine the principles of net neutrality and is therefore ahead of the curve in these telecoms principles. This directly opposes one of the provisions of the TPP and is a concerning trend that other countries around the world such as Russia and Turkey have previously discussed as a response to the revelations from the NSA PRISM scandal.

including the adoption of the Anti-Counterfeiting Trade Agreement (ACTA). dubbed Project www. As previously mentioned. We still believe that Google's long-term strategy is to become a fully vertical player. For example. Whether or not the TPP IP laws are more restrictive will do little to curb innovation. as tech plays a wider role in the global economy. offering visas and funding to foreign entrepreneurs in order to encourage its own 'Chilecon Valley' of tech companies. BMI has previously identified the growth potential for e-commerce as a result of the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) (see 'E-Commerce Benefits Most From AEC Plans'. particularly as it became the first country in Latin America to enact e-money legislation. BMI For markets such as Vietnam. e-commerce is largely being facilitated at the market level already. the easing of foreign investment laws among ASEAN states will help increase the level of capital expenditure on internet infrastructure. with angel investors and venture capital funds looking to get in early to reap the potential benefits from global success stories such as Facebook and Twitter. This is likely to improve over the coming years. BMI argues that the provisions in the AEC will have a more significant impact given the closer proximity and the broader remit of the plans.7 Digital Communications. and those offering good-enough services. Funding for tech start-ups and application development reached new highs in 2014 and continues to gain traction. Increasing wages. Start-Up Chile has had mixed success so far but worldwide. 7. mostly in the lesser developed markets in Asia and Latin America. Mexico is also among the more developed in Latin America.6 Telecommunicati ons. Chile. 7. This tool for financial inclusion will help address e-commerce concerns 6 Telecommunications regarding Peru's cash-based economy. 3. increasing by about 5mn users. as developers look to create the next Snapchat. IT. Google has launched an MVNO service in the US.8% between 2014 and 2019. expanding internet uptake and easing foreign investment restrictions will help give rise to more prominent e-commerce activity. 2013 Computer Technology. reforms and new competition in these telecoms sectors will help spur increased investment. as they would be unable to meet the evolving IP needs of the technology sector. when billions of dollars are at stake. authentication of electronic transactions and consumer protection. lower prices and expanded coverage of internet networks. The number of internet users in Peru is projected to grow at a compound annual growth rate (CAGR) of . Google's Project Fi Opens Up New Battleground BMI View: Google's launch as a MVNO reinforces our view that the next telecoms battle is between operators offering premium services. All signatory countries will be required to conform their domestic laws and policies to the provisions of the Agreement. Tech Start-Ups Undeterred By Restrictive IP Provisions The implications for intellectual property (IP) such as patents. Singapore and Brunei. trademarks and copyright have become among the most controversial aspects of the TPP. with regulation the main risk to its plan. expanding the coverage and upgrading the quality of service. 3. While the TPP also looks to play a role in expanding the digital economy.8 Audio-Visual Technology. the TPP member states that BMI forecasts to have the strongest growth in internet users over the next five years are Mexico and Peru. US negotiators are pushing for the adoption of copyright measures that exceed current international treaties.9 Source: WIPO. semiconductors and other related digital products accounted for 25% of the total patents in 2013.telecomsinsight. Interestingly. and that the form er will need to make the case for consumers to upgrade. 74. with smartphone proliferation expected to play a key role in this development. The IP policies are intended to strengthen the copyright protections of digital products. which would extend the existing international IP enforcement norms in the Agreement on Trade Related Aspects of Intellectual Property (TRIPS) to the online environment. as e-commerce is a fixture of everyday life in the US and other developed markets. Critics say that the TPP's IP provisions go too far and turn Internet Service Providers into copyright enforcers through limiting user access to infringing websites and terminating accounts of those alleged to have engaged in repeated violations. for example. Malaysia. due to the country's proximity to the US and growing consumer spending power (see 'Mexico A Regional Outperformer For E-Commerce'. 2. mostly because the financial rewards far outweigh the risks. Peru will therefore have the most to benefit from the TPP e-commerce rulings. we deem it unlikely that the new IP legislation would have a significant impact on information technology innovation. Other criticisms suggest that the policies would violate user privacy and curb innovation. has tried to replicate this model through the implementation of its Start-Up Chile program. facilitating digital product transfers. We believe the latter will be dominated by diversified players where the telecoms bottom line is less of an imme diate concern. particularly as the US is becoming increasingly concerned with China and Russia's adherence to existing IP laws. Latin America and within the country. which will facilitate the sending and receiving of goods from the US. opening up growth potential for small businesses as well as international e-commerce companies looking to enter the market.3 Semiconductors. Instagram or Uber.7 Others. Despite these factors. Mexico is a market that BMI highlights as being among the most attractive in Latin America from an e-commerce perspective. ICT Patents The Most Sought After Patents Filed By Technology Type (%). These companies are valued at billions of dollars. November 26 2014). patents filed for telecoms. helped by the greater availability and affordability of internet connections through both fixed line and mobile devices. While this ostensibly is a positive move for a number of these markets. US e-commerce players will target Mexico for its growth capability and from a logistics and infrastructure standpoint. September 19 2014).Global Asia custom duties.

and higher margins. Hue. The service will cost USD20 for unlimited voice and messaging. not in itself a negative aim. helping Google. 2014 0 Q113 Q213 Sprint Q313 Q413 T-Mobile Q114 Q214 Sprint Share Q314 Telecommunications 40 Q414 35 T-Mobile Share 30 25 Source: Sprint. not only in the US but worldwide. but it is likely to include greater financial contribution from those players towards the roll-outs and deployments of network infrastructure. As such. we see an opportunity in the lower-end of the segment from consumers wanting more basic packages of voice. which has brought greater competition in the markets where it launched. As operators move further towards offering premium services to boost their revenues. we believe diversified players.6bn in Germany). The service will work across several technologies – including one million Wi-Fi hotspots – and will use both Sprint and T-Mobile's networks for traditional cellular accesses. which is not profitable on its own. we also believe that pure telecoms players will struggle by focusing exclusively in that segment. either though pricing or services offered. as the demand for data services needs heavy investments. As such. Back in 2000. but provides Google with a wealth of data of importance for its core advertising business. MVNO Subscriptions (LHS. The company should beware of greater regulatory scrutiny. However. which will not fit with the offer of cheaper plans. and is only available on the Google Nexus 6 at launch. The DSM will update regulation for content providers. have the best chance to be successful as operators. It remains BMI's opinion that Google's long-term strategy is to become a fully vertical player (see 'Google Has Networks In Its Long-Term Strategy'. The group recently launched its own mobile virtual network enabler (MVNE). could provide opportunities for better wholesale terms. Ireland. Diversification Key To Offer Good-Enough Services Hutchison Whampoa – Revenues Share (%). as well as improve capacity in denser areas. owner of the 3 Group. UK).telecomsinsight. especially relating to its use of consumer 7 . However. March 30). a rate increasing to 21% if its Asian telecoms holdings are included. as a partnership would enable the former to launch in other markets by utilising some of the latter's telecoms specific experience. mn). we believe the DSM will have to offer balance and mandate more attractive wholesale terms in Europe. 15 10 5 Finance & Investments Asia Telecoms Hong Kong Telecoms 3 Group Europe Husky Energy Cheung Kong Infrastructure Retail Property & Hotels 0 Ports BMI believes the service will have a limited impact at launch. as history reminds us. the Federal Communications Commission (FCC)'s recent decision to open up the 3. January 22). it provides an alternative to the current pricing system introduced by many operators. T-Mobile 20 www. an area which Google could further leverage by offering the first pan-European mobile network. This may sound surprising bearing in mind its recent antitrust investigation concerning Google Shopping and Android. this is the case with YouTube. it is a battle we have called 'premium vs.Global Asia Fi. but BMI believes the forthcoming Digital Single Market (DSM) strategy. providing seamless transition and putting customers on the best possible network at the time. but we believe that 'coopetition' and not competition will occur. %). The plan also includes roaming in 120 countries. or providing data rollovers by giving customers greater choice but. We also worry that operators' vision of premium services to cure their current profitability problems may not come through. 2013-2014 12 20 18 10 16 14 8 12 6 10 8 4 6 4 2 2 0 for these premium services. to increase its revenues by focusing on the wholesale market. good-enough' (see 'Premium Vs. like Apple with its Watch. Hutchison Whampoa. Google is not the first operator to launch a service primarily using Wi-Fi networks. which will be credited if unused. especially in Europe.5GHz frequencies to commercial actors – its first foray into spectrum sharing – also gives the possibility to use the spectrum on an ad-hoc basis.5bn in the UK. BMI foresees one operating group which will focus on that segment. But the company could also be helped by regulators in Europe. at least at the onset. If this is the case. Google can leverage its stronger brand name to make a far greater impact than first movers. looking to grow revenues through greater data usage by connecting more devices and objects. messaging and data services. In the US. and operators will only be successful if they manage to make the case Source: Hutchison Whampoa Regulation may also help Google. because they will be able to leverage their core services and specific profitability will matter less. and this is where we see a strategic fit between Google and Hutchison. because of the limited number of Nexus devices in circulation. and USD10/GB of cellular data. operators spent large sums in spectrum auctions (USD35. and also by dealing with one single player. ARPU has been flat and declining since. as though it was unlicensed as Wi-Fi frequencies (see 'Spectrum Sharing A Benefit To New Players'. due on May 6 2015. such as Google or Facebook. making it easier to launch services. and we also believe it is a more conservative launch than Google Fiber. Leveraging Network Capacity Through MVNOs Sprint & T-Mobile. Good-Enough The Next Battle' March 24). has bucked the trend in Europe by not embracing the convergence paradigm. Share Of MVNO (RHS. with the vision that 3G data services would lead to a quadrupling of ARPU. It is able to do so because the 3 Group only represents 16% of its total revenues. This could help Google improve coverage at a lower price. but it has also been able to acquire some of its competitors in the markets where it operates (Austria. it is less reliant on immediate returns from its telecoms arm and can still offer some of the most competitive plans in the market.

drones or lasers. 2014-15 Date Contract March 2015 China Telecom selected Nokia Networks as its largest non-Chinese vendor in its Phase 2 LTE tender process. This is an extension of an initial managed services contract signed in 2006. Asia Keeps Nokia Busy Asia Nokia Networks Asia Sales (EURmn) 1. OSS. Asian markets are still in the process of migrating from 2G to 3G technologies. April 14). In China. software. Telecommunications must therefore look to increase its appeal to the remaining players and. refarming 900MHz to complement Mumbai's existing 3G network on 2. Nokia opined that lower deployments of TD-LTE solutions were behind the fall in sales.3GHz in two circles. It covers 2G. to do that. low-cost Chinese vendors will continue to threaten the company's ability to win and secure customers. Myanmar and India. it Source: Nokia For Q414. core application platforms. Source: Nokia 8 www. The Chinese government has now authorised operators to deploy FDD-LTE technology alongside TD-standard platforms. The value of the deal was not disclosed. NetAct network management system and professional services are to be provided. enabling Nokia/Alcatel-Lucent to augment networks supplied by other vendors. These could provide alternatives to the traditional methods of providing internet access across the globe but. January 2015 Bharti Airtel commissioned Nokia Networks to extend its 4G network to six new circles. Although such products would.1GHz. November 2014 Nokia Networks was awarded a 3G contract by Bharti Airtel to enhance its 3G network in the Mumbai. they will also be platform-agnostic. it must emphasise products that are more software and application-focused. However. BMI believes there are ample opportunities the merged company can exploit across the region. August 2014 Vodafone New Zealand selected Nokia Networks to enable the launch of its commercial 700MHz LTE network.7% of sales for 2014 as a whole. Nokia Networks will provide its 4G TD-LTE technology including Evolved Packet Core (EPC) and GSM wireless networking equipment. Nokia equipment was already providing 4G and 2. utilising 1800MHz . March 2015 Vodafone Hutchison Australia awarded a four-year managed services deal to Nokia Networks. May 2014 Telenor Group selected Nokia as a candidate supplier for radio access equipment and professional services over a period of five years. A stronger.400 Asia Will Be Nokia-Alcatel's Key Battleground Greater China Rest of Asia 1. more diverse and more focused product portfolio would provide for a more sustainable Asian business. Alcatel-Lucent was quick to capitalise on Nokia Networks – Selected Asian Contracts/Deals. and in Greater China in particular. voice and data quality in Klang Valley and Kuala Lumpur. Celcom's 2G and 3G networks were to be enhanced. however. 800 600 400 200 Q414 Q314 Q214 Q114 Q413 Q313 Q213 Q113 Q412 Q312 Q212 Q112 0 Nokia's proposed purchase of Alcatel-Lucent is a move born of necessity. but its ambitions are highlighted by its multiple projects to provide internet access through balloons. Consolidation in markets as diverse as Hong Kong. but were undermined by lower deployments in Japan. Nokia Networks reported a 3.Asia Asia data. Google's projects are there to highlight what it considers best practice so that legacy players follow in its footsteps with more innovative services. driven by a need for increased scale and product diversification. be sold in conjunction with legacy and future mobile infrastructure. Year-on-year growth was a little brighter. weaker demand from India prevented sales from rising any further. BMI believes that a marked improvement in the enlarged entity's Asian business will be key to determining its long-term viability. The operator is modernising its existing 2G and 3G networks and continuing to deploy LTE across Europe and Asia. 3G and 4G+ networks. May 2014 Celcom Axiata selected Nokia's optimisation services to enhance its network. Vietnam and Cambodia means the entity's addressable market is shrinking in terms of total numbers of discrete mobile networks. The deal includes an India-first dual band. The latter was driven by higher mobile broadband network deployments in Vietnam.200 1. ideally.000 BMI View: Buying Alcatel-Lucent would provide a welcome boost to Nokia's ability to engage with clients across Asia. As Asian markets accounted for 39. Indonesia. dual carrier 3G network implementation. net sales increased by 8% as demand for TD-LTE products increased.0% y-o-y decrease in sales to Greater China and a modest 0. With regards to Greater China. as much as a need to future-proof the companies' intellectual properties in an increasingly convergent industry (see 'Nokia/Alcatel-Lucent: A Difficult But Necessary Deal'. West Bengal and Bihar telecom circles. with nonChinese Asian sales increasing by 17% as a result of continued strong demand for network infrastructure in Vietnam. while 4G is only just beginning to be commercialised.9% improvement in sales to the rest of Asia.5% of Nokia Network sales in Q414 and 41.telecomsinsight. October 2014 Nokia Networks and China Mobile announced a framework agreement for mobile communication equipment and services valued at USD970mn. Indonesia and Japan. Flexi Multiradio 10 Base Stations. Myanmar. in the short-term. Deliveries under the agreement commenced in Q114. particularly if it can leverage Alcatel's expertise in small cells technology and efficiency-boosting offerings based on software defined networking (SDN) and network functions virtualisation (NFV). and services to support China Mobile's 4G wireless broadband network rollout in 2014 and 2015.

the emphasis on non-telecoms customers was expected to insulate Alcatel-Lucent from the shrinkage playing out in its traditional telecoms operators and carriers market. Nevertheless. IDATE The demand for advanced rich media communications services by consumers. We believe the toughest battles for supremacy will be waged across the Asia region over the next three years.Asia Asia this development. the merger makes strategic sense. Nokia Networks. It is this broader appeal that will improve Nokia's long-term sustainability in the years ahead and. as well as the growing 'big data' processing requirements of governments and businesses. with Chinese economic growth slowing markedly over the next few years (a development that will impact many of China's key trading partners across the Asian region). The company's expertise in small cells and IP routing equipment will appeal to cost-conscious businesses looking to migrate to the digital world and. Nokia will be facing new competitors such as Cisco Systems and Juniper Networks. Meanwhile. In some respects. too. legacy copper access networks and relatively underpowered mobile broadband plat- 9 . A very different Nokia – and a very different client base – will emerge at the end of that period. 2014 Latin America 9. giving them an edge in the short to medium term. however. Cambodia and Laos. in that regard.3% Source: Nokia Alcatel is particularly strong in Greater Telecommunications as a result of mergers and acquisitions. Developed Markets Lead The Way Asia FTTH/B Household Penetration (%). This is no bad thing. to a degree. and has largely been untroubled by the need to rebrand or realign its product portfolios www. Alcatel-Lucent's so-called 'Shift' strategy was well-timed to capitalise on the emerging demand for infrastructure and solutions designed to leverage the power of 'Big Data' and cloud computing among economies seeking to diversify away from traditional engines of growth. by moving into the IP networking business through Alcatel-Lucent.7% Middle East & Africa 9. Its mobile equipment business lacks traction outside of China. but also its well-established reputation as a supplier of high-quality IP routing/networking equipment as well as fundamental wireline access solutions. With Nokia as the surviving entity. which is the key strength of Chinese upstart Huawei Technologies. fibre can have a vital role to play in assisting economic development in even the most challenging of markets. we expect mobile infrastructure and related solutions to continue to be central to its product portfolio. innovation and breadth of offering. whereas there is little short-term incentive to invest in fibre in frontier markets such as Myanmar. However. will be difficult to dislodge. or alternative to. It seems clear that Nokia's traction in China will bite deeper if it acquires its FrenchAmerican rival. in fact. Singapore and South Korea benefit from being fibrerich. Asia Fibre Market – Differing Speeds Of Light BMI View: Asia's telecommunications markets are at widely varying stages of development and the case for deploying fibre varies considerably from market to market.4% Asia Pacific 29. Ericsson has a long association with operators in the region. we believed this would undermine Alcatel-Lucent's ambitious transformation programme. the market will remain highly competitive as Ericsson and Huawei Technologies have accounted for the majority of mobile broadband/4G contract wins outside of China. Continuity of brand and portfolio can be just as important as pricing. geared towards reinventing itself as a next-generation converged solutions provider. given that a number of Asian markets have yet to migrate to 3G while 4G-powered mobile broadband remains a cost-effective solution to the problem of rolling affordable broadband services into rural areas. as demonstrated not only by its recent successes in supplying LTE mobile broadband solutions to the three principal operators.4% Greater China 12. Advanced economies such as Hong Kong. 2014 South Korea Hong Kong Japan Singapore Taiwan China FTTH Malaysia 0 10 20 30 40 50 FTTB 60 70 Source: FTTH Council. Asia Will Be Nokia’s Battleground Nokia Networks Annual Sales By Region. winning a substantial order from China Mobile in January 2015 and building on its existing long-running relationships with China Telecom and China Unicom.2% North America 13. is driving investment in fibre-optic infrastructure as a replacement for.0% Europe 26.telecomsinsight. these are key players both globally and regionally in the nascent market for SDN/NFV and the broader cloud computing arena. The company must be careful not to place too much pressure on its ability to absorb new product lines and intellectual property while still giving itself enough freedom to rationalise those parts of the business that could act as an impediment to growth. They. BMI believes that Nokia will make further acquisitions to bolster its converged products portfolio both prior and subsequent to completing its purchase of Alcatel-Lucent. We believe Ericsson and Huawei will compete more aggressively on pricing while Nokia integrates Alcatel-Lucent and winnows out unprofitable or duplicated product lines. which are still in demand by operators in countries that are in the process of migrating from legacy narrowband networks. Both – along with ZTE – already offer comprehensive converged products and solutions. unlike Alcatel-Lucent and.

seven Asian markets were featured. thanks to concerted efforts by China Telecom and China Unicom as well as Telekom Malaysia. TV Everywhere Depends On The Cloud Cloud Computing Spending Forecasts (USDmn). as the next-highest ranked markets in the FTTH Council's study. but improvements in penetration will be slow owing to the vast size of the addressable market in China and the difficulties in extending fibre across the heavily forested and mountainous Malaysian peninsula. the Palapa Ring. Perhaps the most interesting markets within Band B are Indonesia. Sri Lanka and Fiji. Malaysia. Hong Kong and Japan came behind only the United Arab Emirates in this survey. large and widely dispersed populations. The 28 Asian markets tracked by BMI's ICT research team may be grouped into three different bands of and TIME dotcom. infrastructural and technological development. over the last decade. of the 38 markets globally with broadband household penetration in excess of 1%. Band B: Large populations. are developing rapidly. the case for fibre has shifted away from an infrastructure-led argument to a service differentiation approach. cable TV and mobile broadband platforms. etc – India. Brunei. replacing 15mn legacy www. Nepal. and our daily analysis has tended to focus on these markets in recent months. Fibre offers the most economic solution to the bandwidth crunch. Cambodia. making it difficult for governments to justify investing in national broadband networks and for infrastructure owners to find ways of persuading customers to upgrade. Thailand. Source: BMI Although growth is still possible in the Band A markets. topographic obstacles to fibre deployment. albeit one that only delivers an appreciable return on investment (ROI) over the long term. Investors will now be switching focus to the Band B and C markets. albeit within a focused multi-year development drawn up by the government. while its newly-created Telkom Akses division has been extending the reach of the multi-service access network (MSAN) with FTTH/ fibre-to-the-premises (FTTP) technology. Taiwan and Macau. supported by advanced technological infrastructure – Japan. robustly-growing economies and a high penetration of advanced communications infrastructure and services.telecomsinsight. The case for fibre – while compelling in all markets from an economic growth perspective – varies considerably both between and within these three . Band C: Weak or underperforming economies. which has a vested interest in seeing its control of the media and economy extend to the electronic domain. The Chinese operators are being driven by aggressive demands from the central government. prolonging the commercial lives of assets operators can ill afford to write-off at a stroke. linking the archipelago's largest islands and population centres. Vietnam. We expect the pace of development to be rapid. held back only by 'digital divide' issues such as a lack of rural penetration and a lack of concerted political and business willpower to push through capital-intensive infrastructure rollouts – Australia. East Timor.000 households) showed that. China. Philippines. testament to those countries' early adoption of fibre. All three face very different industry and business environment opportunities and headwinds. Healthcare and Power) and filtered through our proprietary Risk/Reward Indices (RRIs). in the order of 10 years or more.0 and LTE-A enhance the data throughput rates of copper. Pakistan. Indonesia. GDP Growth Reflected In Fibre Investment Strategies Top Fibre Markets Real GDP Growth (%) Telecommunications The FTTH Council Europe's annual assessment of fibre-to-thehome (FTTH)/fibre-to-the-building (FTTB) deployment globally (which only covers markets with more than 200.Asia Asia forms. and five made it to the top 10. South Korea. China and Malaysia. fibre is expensive to install and price-sensitive consumers will continue to hold out for 'good enough' lower-bandwidth connections. Bangladesh. it is slowing as saturation approaches and operators there must now look to new ways of monetising these resources. Singapore. Mongolia. Utilising data from our ICT. at the end of 2014. Afghanistan. highly dependent on imports. DOCSIS3. while private sector organisations are generally left to set their own agendas in Malaysia. Bhutan and Laos. respectively. Source: BMI New technologies such as VDSL/vectoring. we believe Asia's fibre markets can be classified into the following bands: • • • 10 Band A: High-growth. 2013-2019 e/f = BMI estimate/forecast. In this respect. intense government support for fibre and demand for premium high bandwidth services by end-users. New Zealand. South Korea. Indonesia Wakes Up To Fibre Indonesian incumbent PT Telekomunikasi (PT Telkom) has been building a national fibre-optic superhighway. as well as inputs from teams covering high-growth industries that are reliant on advanced communications technologies (such as Autos. among others. the Philippines and Thailand. High-capacity fibre cables have been installed. Myanmar. However. DiGi. these are interim solutions at best. Hong Kong. However. Country Risk and Operational Risk research teams. mature economies. e/f = BMI estimate/forecast. Infrastructure. little integration of broadband and economic policies.

000 10. January 23 2014). BMI's forecasts for cloud computing spending cover 12 Asian markets at present. and one that we welcome. DTAC is deploying fibre technology from Alcatel that will initially focus on augmenting its backhauling capabilities and boost the effectiveness of its telecoms towers.Asia Asia copper local loops with fibre. building its own enterprise-class service portfolio. Its rival in the mobile and wireline broadband market. both have cited gigabit optical fibre as a necessity for responding to increase demand for cloud and 'big data' solutions from local and international clients. The media conglomerate which operates the largest and most popular group of TV channels in the country states that its aim is to make affordable broadband access widely available. at just 3. jeopardising returns on investment. mobile operators AIS and DTAC are stepping into the fray. The government has also proved unwilling to bankroll the initiative given the likelihood that fibre adoption will be slow in this lowincome market. its decision to launch 11 .com Telecommunications bitious plan to roll out a nationwide fibre-centric next-generation access network. This is a laudable goal. such as app-driven value-added content supplementing key programmes. Indonesia's pay-TV subscription base is forecast to rise to 8. is also investing in fibre in order to transform itself into a multi-service provider. They have seen rival True capitalise on its DOCSIS 3-enhanced cable TV network to offer converged multiplay services. PLDT's launch of desktop-as-a-service (DaaS) in January 2015 augments the company's reputation in the enterprise communications market. The former has developed an am- www.000 50.2% in 2014.With more connected devices in use across the region. including streaming video services such as Netflix and iflix. the government announced a new national broadband initiative (see 'Broadband Plan No Mere Economic Growth Smokescreen'. Minor players such as Liberty Telecoms and Sky Cable are also significantly increasing their 2015 investment budgets to capitalise on latent demand in the cloud. In October 2014. PT Indosat. The replacement of the former government with an unelected military-backed junta suspicious of social media and electronic communications services means that the project seems ever-more likely to take off. BMI suggests MNC's aim is to enhance the monetisation opportunities for its existing businesses (see 'Bullish Pay-TV Outlook Motivates USD3bn Investment'. 2013-2018 60.5% over the past five years by reaching provincial customers. However.691mn by 2020. iflix's launch in the Philippines and Malaysia highlights the importance of a fibre-centric broadband infrastructure to such applications. slowing ARPU declines. However. Besides using the new network to deliver programming to many more prospective new consumers. Under the 2014-2019 Indonesia Broadband Plan. led by China. Although homes passed averaging 28% in 2013. Wireline broadband penetration is relatively low. October 20 2014). Triple T Broadband.000 20. Jasmine International would own onethird of the fund. high-capacity infrastructure needs to be in place if consumers are to fully engage with the 'TV Everywhere' model posed by over-the-top (OTT) services. MNC may well see the opportunity to generate additional revenue through secondary digital media materials. up to IDR278trn (USD23. Approximately 10% of the ambitious project will be financed by the state. BMI maintains the view that although we do not expect the plan to realise all of its aims.2bn) is to be invested in extending wireline broadband services to 30% of the urban population and 6% of the rural population. owing to the high cost of personal computers and the poor quality of local access and backbone infrastructure provided by state utilities TOT and CAT. Jasmine/TTT has increased its market share from 21% to 29. Philippines Looks To The Cloud Incumbent PLDT owns and operates the most extensive last-mile access network in the Philippines. with spending set to be highest in the leading Band A and B markets. November 18 2014). making it the third-largest player with 1. More consumer-focused services and applications are set to launch in Asia in 2015. the time is right to launch such services. Rival Globe Telecom has not been slow to follow suit.000 30. The company has succeeded in diversifying into complementary lines of business including outsourcing and has built a powerful data centres business that enables it to offer high-quality cloud computing services to multinationals looking to establish a regional hub yet are unwilling to entertain the high cost of operating out of Hong Kong or Singapore. AIS will spend USD124mn to develop its wireline footprint. it does play to our expectations that the key to the country's credibility as a regional business centre lies in expanding and modernising its broadband infrastructure and that the use of fibre would ensure the resulting national broadband network will be future-proof. Data Traffic Surges In Asia Asia IP Traffic Growth Forecasts (PB/month). Source: Cisco Visual Networking Index 2014 Meanwhile. it no longer has the resources to finance the project.telecomsinsight. to fund the expansion of its fibre-optic network in the Bangkok Metropolitan area (BMA) as well as provincial Thailand. Mobile Operators Set The Pace In Thailand Thailand offers considerable potential from a fibre investment perspective. while mobile broadband services are to be rolled out to 52% of rural consumers. meaning that the onus will fall squarely on Indonesia's wireline and mobile operators. Around 75% of its customers come from the provinces (see 'High Risks And Rewards For Jasmine's Broadband Foray'. Jasmine International has outlined plans to list a newly-created infrastructure fund (IFF) that would house its wireline broadband business.6mn broadband subscribers. However.000 0 2013 2014e 2015f 2016f Consumer Managed IP Business IP 2017f 2018f Consumer Internet Mobile Data/Internet e/f = Cisco estimate/forecast. yet still achieves TV household penetration of just 21% (versus 7% in 2012). Both PLDT and Globe have secured substantial multi-billionpeso loans to finance their 2015 capex requirements.000 40. but faced with the loss of income from its mobile concessionaires. MNC Group announced plans to invest USD2-3bn to create an alternative fibre-optic high-speed broadband network in Indonesia over the next 10 years. This represents a near-tripling of the 2012 subscription base. given its diverse digital media portfolio. promising to invest in wireline broadband infrastructure to bolster their core businesses and address the perceived shortfall in access to higher-speed broadband services in Thailand. Meanwhile.

allowing operators in the sector to extend the reach of their networks at lower costs. India's telecoms operators have to roll out their own last-mile cables from the NOFN infrastructure. only 800 panchayats had received fibre cable connectivity by the deadline. . however. at a compound annual growth rate (CAGR) of 67%.000 gram panchayats (local village or small town governments) by the end of 2013. The multi-play trend is key to telecoms operators' success – or 12 e/f = BMI estimate/forecast. However. particularly in urban areas.119PB in 2014. outlined in October 2014. Governments can afford to take a longer-term view of fibre investments than commercially-driven operators. but wireless broadband providers will generate an increasing proportion of the demand for towers in markets like Bangladesh. it should be seen as a key part of 'nation-building' strategies. a figure likely to have reached 22. Thus. Source: BTRC. Bangladesh Wireless Broadband Behind New Towers Paradigm BMI View: Lowering costs will drive greater demand for towers companies in Bangladesh. Many FTTH providers sell bandwidth as mobile backhaul to mobile network operators. Asia Telecommunications otherwise – in selling beyond bandwidth. Cisco predicts this volume to rise to 47.950 petabytes (PB) a month in 2013. Ultimately. with 70% of contracts not awarded by late 2014. which is generated by an annual payment of 5% of revenues from all operators. with wireless platforms easier and more cost-effective to deploy than fixed cables. For rural broadband to grow. it will take longer than the two-year timeframe set out for the NOFN to make a difference. Malaysia and Indonesia have made much of the fact that they need to invest in fibre to keep up with burgeoning traffic-routing demands. This may call into question the wisdom of investing in fibre rather than mobile broadband infrastructure. as the potential for return on investment is low. While we believe highlighting rural broadband is an important step. India Fails To Pass Muster Bridging the digital divide between India's urban and rural populations was one of new Prime Minister Narenda Modi's key visions for the telecoms sector. FTTH is a long-term investment and one that will be slow to realise returns. Voice revenues are declining but a combination of voice and data has greater monetisation potential from both a retail and wholesale perspective. Investing in copper today requires a modest outlay but the cost of maintaining copper over a 10. The NOFN project was launched in 2011 with plans to reach all 250. it is far from certain that an operator will recoup its investment in copper before it needs to upgrade to fibre. Governments must also consider the fact that. Tower companies in India. Towers Access Will Support Faster Growth Bangladesh – Broadband Forecasts Data Traffic Floods Across Asia Cisco Systems – a key provider of networking equipment to enterprises and carriers globally – believes that IP traffic volumes in Asia reached 17. the NOFN only lays the fibre-optic cable. looking to enhance the capabilities of their towers. with the falling price of bandwidth. representing a compound average annual growth rate of 21%. a combination of technologies will be needed to reach rural areas.or 20-year period will yield much higher expenses than committing heavily to fibre in the short term. To reach consumers and businesses. BMI Tower sharing trends in telecoms markets have tended to focus on mobile services. Cable laying and trenching contracts for the NOFN remain unresolved. behind only the Middle East and Africa. and we expect new policies to focus on encouraging investment. Thailand and Vietnam in 2015 reflects efforts being made in those markets with regards to fibre (see 'Content Costs Key To iflix's Success'. March 24). Aside from this delay. but with mobile increasingly being integrated into triple.Bangladesh in Indonesia.telecomsinsight. governments should take a more proactive role in supporting fibre-led broadband network initiatives. The NOFN is funded by India's Universal Service Obligation Fund (USOF).and quad-play service packages and with high-definition media content beginning to outpace the capabilities of small-screen devices. BMI believes. Mobile operators have driven the market thus far.273PB per month by 2018. Despite the renewed focus on rural broadband. Bureaucracy remains a key barrier to growth in India's telecoms market. Reaching rural communities requires many hurdles to be overcome such as the timely roll-out of the National Optical Fibre Network (NOFN) and the return on investment to bring broadband outside major towns and cities. we believe the Asian markets presenting the greatest fibre investment opportunities are those that are supported by clear and focused government policies and national broadband strategies. BMI does not believe significant broadband coverage will be realised within the next three to five years. BMI believes there are few operators willing to invest in this network. IP traffic consists of consumer and business-grade Internet data transfers. The key economic consideration should be 'total cost of ownership' (TCO). and then only to the latter region's start from a lower base. A new deadline has been set for reaching the goals. Modi's election win bodes well for businesses. the consumer proposition for fibre looks more appealing when viewed as a long-term strategy. as well as mobile data/mobile internet-specific traffic. The use of third-party infrastructure for expansion purposes will boost Qubee's presence in the Bangladeshi broadband market and www. with the NOFN now expected to be completed by September 2015. The contributions of these types of applications will grow steadily over the 2014-2018 period. an insufficient proportion to cause us to revise our broadband uptake forecasts. but it is mobile-based traffic that will grow fastest. The expansion of a deal between wireless broadband operator Qubee and passive infrastructure provider edotco is an extension of the existing telecoms tower trend.

com e/f = BMI estimate/forecast. a platform offering companies the possibility to offer their applications and services at no data charge to Airtel customers.000 towers in total. and BMI expects the regulator to continue with light-touch data regulation as a way to counter the heavy fees and subsequent taxes asked of operators to offer services in India. and BMI believes it will make it harder for any upsell towards paying for greater usage as the expectation of free services remains in place. and that their model allowed them to bypass operators to deal directly with consumers. WiMAX did not take off as a global broadband technology. as free services will give consumers the wrong impression about the value of data services. leaving swathes of rural parts uncovered. and not the end-user. The latest deal with edotco is the third addendum to a deal that also includes edotco's sister company. pay for the services they use. Bangladesh's broadband market remains subdued. and our view that they flout net neutrality rules. BMI Airtel may see sponsored data as a way to improve profitability and data penetration. We forecast double-digit growth but the market will barely reach 2. The zero-rated or sponsored data service is seen by Airtel as a way to improve data uptake in the country by making the companies. both companies are owned by Malaysia-based Axiata. Increasing access to towers will help drive this growth. Qubee started as a WiMAX operator. both for public policy as a way to improve digital inclusion. mobile operator Robi . cutting the costs of expansion will be very important. gaining its licence for broadband wireless access services in 2008 and launching WiMAX in 2009. The BTRC reported there were just 233. 2013-2019 India Sponsored Data Insufficient To Drive Demand BMI View: Sponsored data plans will only have a limited impact on 3G/4G uptake in India. in that it remains expensive to for most users in India to purchase a smartphone and be able to access data services. as they do not address the greater issues of coverage and device affordability.1trn (USD17. Airtel is pushing the benefits of the service. half of which are in Bangladesh and partners with the biggest players in the country including Grameenphone. coming soon after the latest spectrum auction. and not Facebook nor Google. Airtel's move also has domestic implications.6bn). Banglalink. but the regulator is unlikely to take a stand.telecomsinsight. leaving many operators that invested in WiMAX platforms trying to cover the costs of these roll outs. especially in emerging markets. but this particular example is interesting as it is an operator. Uptake of the service may seem like a win-win for Airtel. Source: Operators.India deliver upside potential to overall market growth. but BMI does not expect the Indian regulator to come out with strong net neutrality legislation. One concerns convincing companies to take part in the scheme. As more services are offered online. BMI also believes that zero-rated plans only address one part of the problem. Asia Telecommunications networks while seeing an increase in data usage. Since late 2013. may have an issue with Airtel's zero-rated service. even though they will negatively impact profitability in the short-term. where operators spent INR1. edotco owns 12. 13 . by lowering the cost of network expansion. it will still remain a minority of all mobile users and will not improve overall ARPU. US mobile operator AT&T's lack of apparent success for a similar endeavour suggests that Airtel may not find it easy to offer a series of relevant free services to its customers. Bharti Airtel has launched Airtel Zero. BMI has written extensively about zero-rated services in emerging markets. arguing the zero-rated approach will cost less than traditional marketing campaigns in terms of brand recognition. demand for faster internet connections will grow and products such as Qubee's portable wireless hotspot will provide viable alternative access options for subscribers.000 WiMAX subscribers at the end of 2014. Regulators in many countries. reaching only 0. The second issue concerns perception. As Qubee moves from WiMAX to LTE. saying that OTT competed with operators by offering the same services without building infrastructure. and while we expect strong growth in terms of 3G and 4G subscribers in India. Qubee has held a licence to offer LTE services over which it offers wireless broadband services. as well as for the companies that will take part in the service. We believe this will encourage the towers trend in Bangladesh.6% penetration at the end of 2014. especially in developed markets. The OTT consultation has a clear operator-bias in its framework and wording. free or otherwise. Citycell and TeleTalk. The heavy regulatory fees mean that operators are likely to roll out in the more profitable areas. and a regulatory consultation on a potential framework for over-the-top (OTT) services.795 a year earlier. This fits in our overall view that net neutrality regulation will remain fragmented worldwide and that a one-size-fits-all approach will not be suitable. but BMI foresees two drawbacks to the operator's plan. regulator. Incumbent BTCL has also concentrated on LTEbased fixed-wireless services and we believe wireless technologies will underpin much of the broadband market's potential. Growing Data Base Does Not Result In ARPU Growth 3/4G Subscribers & APRU (INR). BMI also believes that zero-rated plans flout net neutrality standards. that is introducing such a plan.5mn connections by the end of 2019. highlighting the fragmentation in regulatory standards between developed and emerging markets. Tackling coverage and affordability issues are better bets to increase uptake than the introduction of sponsored data plans. as it would still receive compensation for the use of its data www. down from 315.

Unsurprisingly. The Kiribati government gives no indication of how much the entity generates in revenue but its rollout of 3G and 4G technology in October 2013 will have been a significant investment and one that the government is unlikely to want to repeat. 3G/4G Services Provide A Modest Boost To Growth India – 3G/4G Forecasts Telecommunications Telewings brand) may look to buy fellow underperformers in order to give it the scale to compete effectively. not all players got the spectrum they wanted or at a price they can afford and we reiterate our view that the auctions will provide the catalyst for further market consolidation. instead.Kiribati Asia Spectrum Monetisation Pressure Weighs On Minor Players BMI View: Pressure for India's smallest mobile network operators to consolidate will increase dramatically following the conclusion of the latest round of spectrum auctions.000 population. Smaller players such as Reliance Communications. Videocon and Quadrant have small footprints and investors that would ask for the highest price possible while their spectrum remains their most valuable assets. There was also the chance to acquire spectrum that would fill gaps in geographic coverage or extend services into new regions.100MHz spectrum drew bids totalling INR1.1trn (USD17. Aircel and Tata Teleservices Ltd (TTSL) also secured spectrum. Source: BMI The auctions of 800MHz. The high cost of deploying and maintaining infrastructure is likely a driving force behind the decision to sell. Consequently. Although non-voice services are popular with Indian consumers. owing to the fact that players such as TTSL. previously 100% government-owned. where Uninor is quite strong. 1.800MHz and 2. 1. ATH will be able to benefit from stronger buying power and more expertise that will keep costs down and bring new technologies to the market more quickly. bidding was aggressive. Fifth-ranked Aircel would be a good fit. it was followed by market leader Bharti Airtel. even the largest players will be weighed down by increased debt burdens and will struggle to monetise their newly-acquired assets in the medium to long term. Maharashtra and Uttar Pradesh. which bid INR258. Increased data usage has. a bitter price war has seen data usage costs on 3G and 2G networks fall sharply. The driving forces are the same. but TSKL is the first acquisition outside the country. Speculation has been mounting that Uninor (operating under the 14 e/f = BMI estimate/forecast. At stake was the opportunity to retain valuable resources on which their core businesses and subscribers are highly dependent. ATH owns Fijian incumbent Telecom  Fiji.telecomsinsight. However. Kiribati Offers Potential Mobile Penetration (%) e/f = BMI estimate/forecast.5mn (USD5. including high costs and shared expertise that create economies of scale that can be leveraged to remain profitable and competitive. Telenor-backed Uninor and privately-owned Videocon Telecom proved unsuccessful. netting a 35% premium on the minimum price demanded by the government.7mn). negotiate spectrum swaps or look to be acquired by a larger .1bn for spectrum in the 900MHz.800MHz and 2.6bn) from the majority of India's mobile network operators. as well as the contiguity of frequencies to other airwaves held or pursued by the bidder. Yet-to-launch 4G operator Reliance Jio Infocomm spent INR78. However. which offered INR291. Kiribati Small Market Seeks Large Investor BMI View: The consolidation trend across the global telecoms industry is beginning to play out in smaller markets. produced only limited revenue growth in real terms and has accentuated the issue of weakening contributions from voice and messaging services. generally managing to retain their footprints. content itself with being a competitive player in the markets where it is not challenged outright by its larger peers. Telenor must. its options in this regard are limited. is the sole provider of telecoms services to Kiribati's 104. principally seen in the Caribbean. as the high price of spectrum in their target regions quickly outstripped their ability to profit from their proposed investments. mobile operator Vodafone Fiji and Fiji's international telecoms provider FINTEL (among other local companies). The acquired company.3bn. We believe ATH's acquisition www.100MHz bands. driven by high costs of upgrading services.8bn on 49 blocks of 800MHz spectrum in 10 regions. therefore. Source: BMI Fiji's Amalgamated Telecom Holdings (ATH) acquired Kiribati telecoms incumbent Telecom Services Kiribati Ltd (TSKL) for AUD7.1bn. as it has relatively small user bases in key markets such as Gujarat. The price per megahertz varied according to the region of the country to which it was assigned. Third-ranked IDEA Cellular bid INR303. 900MHz. BMI notes that consolidation among players in small island nations is a growing trend. and by second-ranked Vodafone India. As a larger company.

Operators seek to offer services across both fixed and wireless infrastructure. business and wholesale broadband customers. BMI expects M2 to become a more appealing acquisition target in its own right as service diversification becomes more important to Australia's surviving alternative operators. M2 Group has agreed to buy CallPlus Group and its related entity 2Talk Ltd for a total consideration of NZD250mn (USD186mn).2% to MYR795mn (USD219mn) in BMI View: Acquiring CallPlus will make M2 more appealing to prospective buyers as Australia's telecoms consolidation race reaches its peak. highlighting the increased outsourcing capabilities of the sector's leading players. while the banking and financial services sector accounted for 19% and 'content and technology' companies accounted for 17%. scalable and high-quality remote data storage and retrieval services www. become the principal application for the country's data centre industry. Over the last five years. Half of all revenues were attributed to 'managed services' (versus 20% in 2013). Valued at 5.4% revenue increase seen in 2013. linking up with regional players to boost negotiating power is the driving force behind the trend. Cable & Wireless Communications (CWC) is in the final stages of acquiring Columbus Communications. greatly improving on the MYR44. The new Sedenak Iskandar Data Hub will be equipped with 1mn servers and will be powered by 600MW of electricity. this was still a remarkable achievement and highlights the potential for Malaysia to achieve its goal of becoming a cloud-centric IT services hub for the South East Asian region. Around MYR143mn. therefore. February 16). particularly as overseas activities make a more substantial contribution.2% to MYR638mn by the end of 2015 and to reach MYR1.000 consumer. larger players can negotiate more favourable terms for the products they offer. This is a global trend driving consolidation across companies operating in different segments of the telecoms market. This is expected to rise by 31. the data centre industry has grown rapidly to support 26 data centre service companies and nearly 200 specialised service providers capable of providing affordable. 15 . As the telecoms market moves towards generating revenue from content. The deal also strengthens CallPlus's position in New Zealand's less mature broadband market. Although M2 has already consummated a number of highprofile acquisitions aimed at expanding its reach in the enterprise. The government is keen to see the cloud and data centre services industry quickly become a major contributor to economic growth and with revenues expected to reach MYR915mn by the end of 2015 and MYR2. both in Malaysia and overseas. the deal is expected to lift M2's earnings per share (EPS) by 15% in the financial year ending June 2016. according to new data from the Malaysian government's Performance Management and Delivery Unit (PEMANDU) and the Multimedia Development Corporation (MDeC). equivalent to around 15% of New Zealand's broadband services market. Although less pronounced than the 39. 2013-2019 Telecommunications to the growing numbers of multinational corporations looking to establish regional headquarters in the country. We expect this trend will continue among operators across the pacific. either through mergers or partnerships. Hosting many of Malaysia's IT and telecoms service providers. its continued strong support for the development of the sector is welcomed. making it a focal point for M&A in that country. Through investment in a new 700-acre centralised data hub – adding to the 1mn square feet of data centre space already in service – the government will be looking to position Malaysian IT companies as leading players in under-developed markets such as Vietnam.1mn (7%) recorded in the previous year. a y-o-y increase of just over 51%.telecomsinsight. a deal that gives the Australian company access to 400. Robust government support through national policies and a structured approach to promoting local IT and telecoms companies will benefit both the IT market as well as the economy. or 18% of total revenues in 2014. The latest results reflect BMI's long-term outlook for Malaysia's IT market and for cloud computing in particular. while the possibility of acquiring pan-Caribbean player United Telecommunications Services has attracted both CWC and regional rival Digicel (see 'Digicel And CWC Move Battle To Curaçao'. rather than simple connections. Source: BMI Data centre and cloud computing-related services and infrastructure revenue grew by 26. it will be in a strong position to cater to the growing needs for 'big data' services across multiple verticals.536mn by the end of 2019. Thailand and Myanmar as well as compete more aggressively with relatively well-developed markets such as Indonesia and the Philippines. came from offshore operations. New Zealand CallPlus Deal Broadens M2's M&A Appeal e/f = BMI estimate/forecast. Cloud-based managed and outsourced services will. Malaysia Investments Unlock Malaysia's Data Centre Hub Potential BMI View: Strong cloud computing and data centre revenue growth was reported for 2014.2bn by 2020. Government agencies accounted for 29% of total revenues in 2014. In smaller markets where there are fewer players and economies of scale are less. Cloud Key To Economic Growth Malaysia Cloud Forecasts.6 times CallPlus's EBITDA.Malaysia Asia of TSKL is the start of a similar trend across Pacific Island nations. ensuring that our bullish view of Malaysia's prospects as a 'Big Data' hub for South East Asia continues to play out. We estimate cloud-only spending reached MYR487mn in 2014.

Consumer & Broadband Drive CallPlus' Business CallPlus's FY14 Revenues By Segment (TOP) & Product (BOTTOM) Wholesale 5% Business 28% Telecommunications Singapore SMRT Lends Weight To Fourth Mobile Licensee BMI View: A fourth mobile network operator would help drive prices down and increase consumer choice. Although CallPlus is also service-centric and reaches customers through copper and fibre local loops rented from Chorus. BMI Data 58% Source: M2.148mn and 1. increased price competition will drive revenues down. However. so the survivors' collective attention will turn to service-centric providers. such as cloud . OMGTel would also be able to tap the data SMRT holds on its commuter customers. Players with diverse customer. the existing players' ability to offer full converged service packages would have the greater appeal and offer increased monetisation opportunities. for example – the company is increasingly being outpaced in terms of customer additions and revenue growth by rivals iiNet and TPG Telecom. copper cable and radio networks employed within its national public transport network would enable OMGTel to rapidly and cheaply roll out its proposed mobile network. as consolidation among Australia's infrastructure operators begins to peak. we therefore believe the market will embrace lower rates and that the new entrant would see strong interest in the short to medium term. Although BMI forecasts the market to continue growing due to bundling and fixed-mobile convergence initiatives.5mn) in OMGTel if the latter secures Singapore's fourth mobile network operator licence later in 2015. M2 would become a much more attractive investment prospect than it is at present. Its experience in delivering advanced services. displacing either StarHub or M1. Leveraging the infrastructure resources of SMRT. mobile penetration reached 146. Mobile ARPUs averaged SGD49 in 2014.092mn). in order to keep pace. down only slightly over the last three years. CallPlus needs a broader and more appealing service portfolio. it has indicated it will do the same in the mobile arena. Little Room For A Newcomer Mobile Subscriber Net Additions (‘000) Consumer 67% Mobile 5% Other 3% Fixed 34% Source: Operators. OMGTel is well-positioned to exploit the remaining opportunities in the market than rival MyRepublic. The fragmented nature of New Zealand's broadband service market means that customers have historically been able to choose from a limited number of service providers. enabling it to directly target potential users. which it will gain through ownership by M2. Service-focused players like M2 have been left on the sidelines for now. Those companies respectively served 2. www.Singapore Asia utility and consumer voice and broadband service markets – it acquired Engin. its low-cost coverage of 65% of the population of New Zealand means that M2 can reach a large. well behind market leader incumbent SingTel (4. BMI believes that. however. under its belt. established market very quickly and profitably.5mn (USD25. MyRepublic – which is also applying for the new mobile licence – has already disrupted the fibre-optic broadband market with ultralow prices. with CallPlus. but there is little room for a newcomer in this saturated market. has been growing through the purchase of smaller infrastructure-centric players as it bids to compete with Telstra and Optus in terms of network reach. the latter's low-price model should not be dismissed outright. CallPlus iiNet.7% in 2014. will help CallPlus compete more effectively with incumbent Spark and rival Vodafone New Zealand. OMGTel aims to become the country's third largest mobile operator. Access to SMRT's extensive fibre-optic. owing to the saturated nature of the market. The rollout of the ultrafast broadband (UFB) network is changing the market dynamic and. Dodo and Eftel in 2013 and Primus Australia in 2012.852mn subscribers at the end of 2014.telecomsinsight. in the longer term. product and geographic portfolios will figure highly in those expansion plans and. We believe this will force the existing players to become more selective with regards to network investments as profit margins shrink. 16 Singapore Mass Rapid Transit Group (SMRT) has agreed to invest up to SGD34. in particular. All three have recorded variable customer growth rates in recent years.

Trustwave's main security offerings include threat management.1 International 1244 Telephone. as data from the existing operators show there is stronger demand for premium multi-product packages than low-cost prepaid services. and it currently has three million customers. for the first time. The operator has identified the most threatened industry verticals are government. SingTel has been looking to diversify beyond its core legacy businesses of offering voice and data services to consumers. telecommunications. The company claims that. Source: BMI NTT Communications Corporation (NTT Com) has launched mobile data services for enterprises in Thailand. 2014 Pay Digital Business Television. NTT believes Thailand will be a central hub for ICT resources and services for GMS countries such as Myanmar. but they will struggle to match the Tier 1 capabilities of NTT Com's local IP-based network which was augmented with high-capacity points of presence in 2014 and gained access to one of the largest independent data centre facilities in the Greater Mekong Sub-region (GMS) in 2013. Others.5 Mobile Communications. February 4). Cloud Gaining In Appeal Thai Cloud Market Forecasts. 139. as Singapore rolls out its Smart Nation initiative (see 'Smart Nations – Privacy. DTAC and True. 211. providing further uplift to NTT Com's long-term growth outlook.Thailand Asia We therefore believe that a price-focused new entrant would offer market upside only in the short to medium term. . this new strategy could easily be replicated in other underserved Asian markets.8 Managed Services. Cambodia 17 . Laos. Improving its ability to monetise its local data centres business. We expect cybersecurity to become a key topic for enterprise and IT services going forward. 2013-1019 Fibre Rollout & Maintenance. high-tech and transportation. March 18). The enterprise market is by definition more global than the retail market. Cybersecurity An Important Segment For Diversification BMI View: SingTel's acquisition of Trustwave will help with its ambition to diversify its services beyond core offers such as voice and data services. The latter three companies have pledged to invest heavily in wireline broadband infrastructure over the next three years. with cyberthreats a growing concern – as highlighted by Orange during the presentation of its Essentials2020 strategic plan (see 'Essentials2020: Orange Needs To Make The Case'. Thai enterprises can avail solutions that link mobile devices and private networks.8 Sale Of 251.7 Equipment.5 Source: SingTel SingTel has acquired a 98% stake in cyber and managed security services company Trustwave. Security Are Key Considerations'. providing wireline and mobile voice and data services on a one-stop basis. an American company. Adconion and Kontera and a recent joint venture with Sony Pictures and Warner Bros Entertainment to establish an over-the-top (OTT) video service called Hooq in its Asian markets (see 'SingTel Sets Itself Up As OTT Challenger'.telecomsinsight.1 Business Solutions. and SingTel has to compete with the largest operators offering a range of IT services to their clients worldwide. as the Trustwave acquisition follows a partnership with FireEye in February 2015 to set up the Advanced Security Operations Centre (ASOC) in the region. both on the consumer and enterprise side as more and more objects become connected and institutions realise the threats they face. for a fee of USD810mn. Such a player could carve out a niche in the mobile-only field but. NTT Com Thailand secured an MVNO licence early in 2015 and will use its new ability to provide mobile services to offer extra-flexible solutions that enhance its existing offerings for the business market. NTT Com Thailand claims to serve 'thousands' of enterprises of varying sizes and sees considerable potential in a market that is grossly underserved by incumbent wireline operators TOT and CAT Telecom and which has yet to be properly exploited by consumer-focused players e/f = BMI estimate/forecast.8 Data & Internet. the new entrant's contribution would be modest at best. financial services. Cybersecurity is another area of growth for the operator. as well as the possibility to leverage a greater range of IT products and services to Trustwave's existing customer base. 1697. 154. SingTel will have opportunities domestically. 7249.9 National Telephone. with acquisitions in the mobile marketing and advertising space through Amobee. vulnerability management and compliance management. 1502. February 2). as more threats and vulnerabilities emerge as the number of connected devices continues to expand. 3140. 567. but it is by expanding those capabilities regionally and globally that the operator will find www.9 Telecommunications further growth. gives SingTel a greater global reach. BMI believes the acquisition of Trustwave. Thailand NTT Com Regional Expansion Goes Mobile BMI View: An MVNO service will add value to NTT Com's enterprise communications services business in Thailand. and BMI foresees great opportunities for cybersecurity services. 688. Looking For Diversification Revenues By Operating Units (USDmn).

000 in Thailand-based games developer Sinoze.2% of the total value of the Thai IT market. will be key to operators' continued growth in saturated markets. or 60% of the USD488mn overall market. In doing so. InVent has already invested THB130mn (USD4mn) in five local mobile gaming. This will be facilitated by its January 2015 launch of a new global machine-to-machine (M2M) service. plus the increased availability of locally-produced. Mobile-Centric Casual Gaming Takes Off Thailand Online Gaming Revenues By Type (USDmn) Source: Newzoo. access to deeper consumer background and engagement data that can be aggressively monetised. and is developing an international version. over the 2014-2019 period. It will help AIS attract and retain customers and give both AIS and third parties.telecomsinsight. offsetting shrinkage in the voice and messaging business. BMI forecasts annual sales of smartphones and tablet PCs to grow to 19.5mn. Arcstar Universal One Mobile. Indonesia (Telkomsel). beginning its transformation from an operator of networks to a provider of digital lifestyle services. Singtel – which operates mobile networks in Singapore. Thapster. By leveraging its indirect relationships with games developers and publishers. by then. Applift InVent will invest USD750. www. it. Source: BMI As InVent is a subsidiary of InTouch Holdings. At the very least. increases of 38. capitalising on the growing ubiquity of connected devices and consumers' insatiable appetites for casual games.  Telecommunications The Thai mobile gaming market generated revenues of approximately USD94mn in 2014. India (Bharti Airtel) and the Philippines (Globe Telecom) – is facing similar challenges with regards to service monetisation. according to NewZoo. BMI believes NTT Com's strategy of securing an MVNO licence in Thailand could be replicated in the other GMS markets it is targeting. spending on cloud services is already outperforming the traditional telecoms services sector as well as IT service and hardware spending trends as a whole. Sinoze has approximately 1mn monthly users of its mobile music game.7mn and to 2. 18 e/f = BMI estimate/forecast. in addition to boosting its host network partners' revenues and. It has been working to secure new multinational clients that either already operate in these countries or which are looking to enter these markets but require suitable high-quality communications solutions. giving Sinoze the freedom to develop a broader range of products. This represented approximately 40% of total gaming revenues for the country as PC-based immersive gaming is being supplanted by mobile-centric casual gaming.Thailand Asia and Vietnam. cloud computing and online health applications companies and will leverage its relationship with Thailand's largest mobile network operator to increase the exposure of these companies to Thai and international audiences. We forecast the Thai cloud market to grow in value from USD98mn in 2013 to USD462mn by 2019. such as advertisers. 2013-2019 Sinoze Investment Fits AIS's Game Plan BMI View: Mobile gaming will aid AIS's transformation into a 'digital lifestyle service provider'.8%. Australia (Optus). more broadly. benefiting both the company's core enterprise services business. itself a 40% investor in AIS. The GMS countries have a total population of 300mn and enterprises are flocking to these markets as liberalisation and economic growth open up new business opportunities. AIS can expect to see a modest uplift to its non-voice mobile service revenues in the short to medium term: the company's data revenues grew by 49. would benefit from the increased access to so-called 'big data' from users of InVent-backed applications. locally-relevant mobile-optimised content will be key elements in sustainable sectoral growth. By 2018. Electhap. Potentially. spending on cloud services and data centre facilities. AIS and strategic partner SingTel will benefit through increased usage of mobile data services on their networks. respectively.054bn in . We expect NTT Com to pursue MVNO licences in the GMS markets. in Hong Kong and Thailand. a 164% increase y-o-y. in return for a 16. We believe it would benefit from the indirect relationship with InVent's investments. The increased penetration of smartphones and tablet computers.3% and 13. It is BMI's core view that services and content.3% to THB33. such as Sinoze. AIS's business model is one that could easily be extended to regional partners. cloud spending will account for 15. Its Amobee mobile advertising business is already active across Asia. the mobile gaming sector will be worth approximately USD297mn. Digital Content Driving & Driven By Device Sales Thailand Consumer Electronics Forecasts. it could collaborate with the venture capital business to invest in further technology companies across the region or utilise its expertise in identifying attractive start-ups in new and existing markets Singtel needs no longer be constrained by having a limited geographic footprint. rather than customer acquisition and handset sales.7% stake in the business. this kind of close relationship between mobile network operator and mobile content producer will be financially beneficial for all parties. In Thailand. too.

and accepts no liability whatsoever for any loss or damage resulting from opinion. to provide the financial and technical assistance needed for the deployment of advanced infrastructure and the development of monetisable value-added All content. Viettel competes with well established multinational players such as Orange. repackaged. analysis.0 Tanzania 100. we expect Viettel to look to capitalise on the opening-up of the telecoms sector in Cuba over the next few years. This will partly finance Viettel Global's planned USD2. 19 . All such content is copyrighted in the name of Business Monitor International Ltd. Tanzania and Burundi. increasing its registered capital to more than USD1. making it difficult to assess the success of the international expansion strategy to date. Sub-Editor: Elizabeth Carroll All information. April 13). but this is unlikely to prevent Viettel Global from investing further across the region and opportunities could well arise in Nepal. Telecommunications Burundi and Haiti indicate that the company's core basic voice and messaging services tend to be of a higher quality than established players' offerings while more advanced services are limited in scope but still represent greater value for money than incumbents' products. Viettel Global has yet to identify those markets it is targeting over the next five years. Strong performances in markets such as Haiti and Mozambique suggest that Viettel's low-cost. holding back the emergence of affordable advanced services. All rights reserved. A new variation on that strategy sees Viettel partner with an established player. We believe this will prove to be the case in Cameroon and Tanzania.6%-owned subsidiary. Viettel will exploit opportunities and weaknesses in emerging markets where its low-cost 'good enough' services will help it outperform struggling minor players and increase competitive pressures on market leaders.2bn expansion into eight new markets over the next three years. Digicel and Tigo. including forecasts. Subscriptions Manager: Yen Ly Production: Fauzia Borah Isahaque Copy Deadline: 29 April 2015 www. analysis and opinion. Only limited financial data and scant key performance indicator data are available for the Viettel Group. and as such no part of this content may be reproduced.04bn. A winnowing-out of these underperforming investors and the redistribution of resources to more dynamic players is to be welcomed. increasing its population coverage by more than 180% to 350mn. 2015 Company Country Viettel Global Ownership (%) Vietnam (holding company for investments in Haiti) 100. will play to the strengths of this flexible multi-layered strategy. Thailand and Bhutan as new licences become available. Viettel Global's international expansion strategy has. Viettel Group. high-efficiency model can drive significant improvements in lacklustre markets and act as a catalyst for the withdrawal of inefficient minor players. Viettel Global. However. as was the case in Peru. Questions remain over the Vietnamese government's control over the media and its financial influence over utilities and life services markets in Vietnam (see 'Limited Impact On ICT From Trans-Pacific Partnership'. In some markets. involved the takeover of distressed assets such as the purchase of Beeline Cambodia (see 'Beeline's Demise Shows Small Players Have Little Value'. errors.0 Burundi 85. copied or redistributed without the express consent of Business Monitor International Ltd.0 Viettel Timor Leste UNIP LDA East Timor 100. Vietnam's incumbent telecoms operator. the country could benefit from Vietnam's experience in moving to a capitalist economy and business environment. ad-hoc local press reports emanating from Peru. Source: Viettel Global Analysts: Andrew Kitson © 2015 Business Monitor International Ltd. courtesy of the government. as well as in the eight new markets the group wants to enter over the next three years. but the recent investments in Cambodia and Myanmar expanded its footprint to 10 countries and press reports suggest that Orange Kenya is next on its list and that its Swavitel unit in Swaziland expects to win that country's second mobile operator licence before the end of 2015. will invest up to VND10trn (USD465mn) in its 97. inaccuracies or omissions affecting any part of the content. forecasts and data provided by Business Monitor International Ltd is for the exclusive use of subscribing persons or organisations (including those using the service on a trial basis). Building on its investments in Haiti. Asian and African markets suffer from a surfeit of licensed telecoms players. so far. As we have often opined. and in crowded markets such as Pakistan and Bangladesh where consolidation becomes inevitable. We believe that Viettel's prowess in logistics – born of its history as a unit of the Vietnamese military – and its deep access to finance. such as Myanmar's Yatanarpon Teleport. Many of these are privatelyowned and have yet to fully exploit resources such as spectrum and infrastructure. has been based on information and sources believed to be accurate and reliable at the time of publishing. Vietnam's membership of the Trans-Pacific Partnership will enhance its ability to establish mutually-beneficial trade deals with other member states as well as neighbouring markets in Asia.0 Note: Omits Beeline Cambodia and investment in Yatanarpon Teleport as these were still in the process of being ratified at the end of March 2015.0 TNHH Viettel Cambodia Cambodia 90. Airtel. here. where Viettel only recently secured operating licences. MTN.0 Cameroon 70. or the purchase of all-new operating licences allowing to build its own mobile and/or wireline networks. March 20).0 TNHH Viettel Overseas TNHH Movitel Viettel Cameroon SARL National Telecom SA (Natcom) Viettel Burundi SA TNHH Viettel Tanzania Haiti 60. Business Monitor International Ltd makes no representation of warranty of any kind as to the accuracy or completeness of any information provided.0 Mozambique 70. Viettel's 'good enough' low-cost services are sufficient to ensure it can build a modest market share and still generate a reasonable return on investment.Vietnam Asia Vietnam Viettel Expansion Benefits Underperforming Markets BMI View: Leveraging its considerable financial and logistics assets.telecomsinsight. Viettel Global International Investments.