Income levels of consumers in the world's poorer nations may not come anywhere near their wealthy counterparts but they offer far better growth prospects for the sector as a whole, telecommunications executives said at CommunicAsia2006, a major four-day exhibition and associated conferences that opened on Tuesday.
"Growth in the mobile industry isn't going to be coming from the guys in the crowd here wearing coats and ties," said Andrew Buay, chief operating advisor of Globe Telecom, a telecommunications operator from the Philippines.
"If you just think of where the next billionth [subscriber is] ... coming from, they are going to be coming from countries with GDP [gross domestic product] of less than $1,000 [per capita]," he said.
Industry research estimates that there are 2.2 billion mobile subscribers globally, a figure expected to rise to 3 billion by the end of 2008.
Asian countries that fall into the high growth category include Pakistan, Indonesia, China, India and the Philippines, where rural areas remain largely untapped, industry players said.
"Pakistan is one of the fastest growing markets. It's a huge market," said Mubashir Naqvi, vice-president for commercial operations at Ufone, a telecom operator that began service in 2001.
Naqvi said that an estimated 95.5 million potential consumers in Pakistan remain untapped despite the presence of six mobile operators in the country.
Globe Telecom's success in the Philippines, where it is one of the leading mobile providers, demonstrated clearly that there are opportunities in the developing markets with average revenue per user (ARPU) of $5 to $6, Buay said.
"We have to just take the example of the Philippines ... we have one of the highest operating margins of operators in the world and that is on the $5 to $6 ARPU customers.
"It doesn't mean a low-income, low-ARPU customer is any less profitable."
At the same time, the take-up of more advanced services and products, including third-generation (3G) technology promising faster speeds and better video images, has generally been below expectations in developed as well as under-developed countries.
Industry players risk missing out on growth opportunities in less-developed markets if they continue to hope that the developed markets will warm to the roll-out of more advanced mobile services, Buay said.
"I think if we just keep on talking about growth for high-end 3G mobile broadband and so forth, then I think we are missing the point," Buay said.
"We are going to miss the next billionth mobile subscriber," he said, adding that a change of mindset is needed if the industry hopes to be successful in developing markets.
"We have to think that innovation isn't just the domain for the high ARPU customers," he said, urging the industry to think of applications and services that can take account of the cash flow constraints of low income subscribers.
Jonathan Auerbach, a senior executive from management consulting firm McKinsey and Company, said that it remains to be seen which new applications and services will win mass acceptance and become a new cash driver for the mobile sector.
"Across the board in wireless globally, growth rates are slowing,"
© 2006 Agence France-Presse
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