Global mobile connections to reach 6.49bn in 2014

MELBOURNE, AUSTRALIA: Global mobile connections will reach 6.49 billion in 2014, with revenues of $1,036 billion, says analyst firm Ovum.

However, ‘emerging maturity’ in emerging markets and continued competition in developed markets will hit operators hard. Operators must seize the initiative to benefit from the huge scale of the mobile industry.

Steven Hartley, principal analyst, says: “The upgrade in our 2014 outlook is driven by Asia-Pacific. Containing China and India, the region will remain the connections growth engine, accounting for 63 percent of global net additions between 2009 and 2014.”

Our estimate for global connections in 2009 (4.56 billion) is 1.2 percent lower than previously forecast. However, by 2014 our forecast of 6.49 billion connections is 1.1 percent higher than our previous estimate.

The upgrade in our 2014 outlook is driven by Asia-Pacific. Containing China and India, the region will remain the connections growth engine, accounting for 63 percent of global net additions between 2009 and 2014. As a result of this increased focus on emerging markets, global prepaid connections will grow from 3.3 billion in 2009 to 4.79 billion in 2014.

Conversely, developed market connections have borne the brunt of the recession. Therefore, we have dampened our expectations in most developed markets. There is still growth – a CAGR of two percent from 2009 to 2014 in Western Europe, for example – but operator strategies in mature markets must reflect the shift in emphasis to maintaining profit levels rather than top-line growth.

Recession and ‘emerging maturity’ slows short-term revenue growth

Pressure on developed market players is reinforced in our revenue forecasts. Currency fluctuations make comparisons with earlier numbers difficult, but our revenue estimate for 2009 ($873.96 billion) is 1.6 percent lower than before. By 2014 we expect the 2014 figure to be $1,036 billion, seven percent lower than previously forecast.

However, we still expect a CAGR of three percent over the forecast period, with over $1,000 billion dollars in revenues in 2013. Much of this revenue growth comes from the extraordinary connections growth in emerging markets – North America and Western Europe’s contribution to global revenues will fall from 44 percent in 2009 to 40 percent in 2014.

Yet the proportional contribution to global revenues from emerging markets will be lower than for connections, as ARPU continues to decline due to increased competition and saturation. Such ‘emerging maturity’ will be a key feature of many previously high-growth markets to 2014.

Data to continue its mercurial rise, but voice to remain the ‘killer app’

Mobile data services are set to grow in prominence, particularly in developed markets. In 2009, estimated mobile data revenues were $203.19 billion, growing at a CAGR of 11 percent to $340.31 billion in 2014. This will mean that, on average, 33 percent of operators’ revenues will be derived from data in 2014, compared to 23 percent in 2009.

Increased data usage will mean greater focus on spectrum during this period, as well as other capacity-increasing mechanisms such as traffic management solutions.

However, it is vital that operators do not forget more traditional services. Messaging will still contribute 45 percent of data revenues in 2014, despite the rapid price erosion currently being seen.

Voice will also continue to be the ‘killer app’, contributing 67 percent of operator revenues globally in 2014 and no less than 60 percent in each region. However, voice margins will be difficult to maintain in the face of intense price pressure.