- Grows to 3.1 billion to add another 460 million subscribers by 2020; slowdown imminent
- Asia will be the centre of mobility by 2020, led by China, India and Asean nations
ASIA Pacific (APAC) continues to be the biggest contributor to global mobile subscriber expansion but over the five years, growth is expected to slow down due to several contributing factors, according to a new report by the GSM Association (GSMA).
Since 2012, the APAC region has gained 690 million subscribers, and by 2020 another 460 million will be added, bringing the total to more than 3.1 billion, noted the GSMA’s 2017 Mobile Economy report.
The report, released in July, said APAC will account for almost two thirds of new subscribers globally by 2020, and will have the second highest growth of any region (behind Africa), with a compound annual growth rate (CAGR) of 4.2% between 2016 and 2020. By contrast, the number of mobile subscribers in the Asia Pacific region in 2016 was pegged at 2.5 billion, the yearly report by the GSMA noted.
GSMA said the region’s subscriber base will grow faster than the global average and by 2020 and that three quarters of the population will subscribe to mobile services (compared to 72% globally).
Of the top 10 markets across the world in terms of subscriber growth over the next five years, five are in APAC. Four fifths of the region’s incremental growth by 2020 and almost half of the global total, will come from the two dominant markets, India and China. India is expected to add 206 million new subscribers by 2020, it noted.
“With the penetration rate by 2020 at only 65%, there is still considerable scope for growth. China will add another 155 million subscribers by the end of the decade, bringing its total to 1.2 billion, or 86% of the population,” the report said.
The director general of the GSMA Mats Granryd (pic, above) said recently at the GSMA Asia conference that Asia continues to be the main engine of growth for the remainder of the decade.
“Technologies such as 4G allow a rich range of innovative services across both developed and emerging markets,” he said.
But despite these adoption figures, the report also cautioned against too much optimism as mobile growth in APAC has reached its peak in terms of subscriber growth.
“Between 2016 and 2020, the subscriber base will increase by a CAGR of 4.2%, down from 7.7% over the previous four years. Much of this slowdown can be explained by the differing levels of market maturity across the region,” it said.
“Taiwan, Japan, Singapore and Hong Kong, as well as Australia, South Korea and New Zealand continue to lead with penetration rates of more than 90%, and this signals saturation in these markets. In such markets, subscriber growth is only expected to increase by one percentage point between 2016 and 2020,” the report said.
The report also pointed out that APAC is diverse and also home to countries such as North Korea and some Pacific Islands. And although new developing markets such as Myanmar may have experienced explosive growth since 2012 – primarily due to the liberalisation of its telecoms market in 2014 and heavy investment from the mobile operators – such countries are now slowing down too.
“Overall, the developing APAC markets will see average subscriber penetration grow from 64% in 2016 to 74% by 2020.”
GSMA said by the end of 2016, the number of smartphone connections in APAC surpassed two billion, just over half of total connections. The leaders in smartphone adoption are Singapore (83%), Australia (80%) and South Korea (80%).
However, developing markets such as China, India, Indonesia and the Philippines have been the main drivers of growth, adding more than 210 million smartphone connections between them in the last year alone, it added.
In terms of manufacturing, GSMA said a number of local smartphone manufacturers have been gaining share in countries such as India, the Philippines, Indonesia, Thailand and Vietnam.
India, GSMA noted, is becoming a hub for manufacturing of other brands due to policy changes that liberalised foreign direct investment (FDI) rules in the mobile sector.
For example, Huawei in October 2016 announced that it will start to manufacture smartphones in India in collaboration with the global electronics manufacturer, Flex India.
The growth of smartphones will directly impact mobile data growth, GSMA said. “As smartphone uptake continues and usage of additional services grows, by 2020 mobile data revenue will have grown by an annual average of 4.2% to US$216 billion, accounting for 46% of total revenues.”
Counterpoint Research analyst Neil Shah noted that the Indian government's move two years ago to drive local manufacturing by increasing import duties have prompted a home grown mobile manufacturing revolution.
“Four out of five mobile phones sold were ‘made in India’ during Q2 2017. The Government also introduced a phased manufacturing program during the quarter to increase the local value addition which is currently pegged at a low 5.6%.
“This means India's dependence on other export markets such as China, Vietnam or Korea has become lower. China indirectly remains the key export market in terms of semi knocked down or completely knocked down units.”
Asked how this would impact Southeast Asian countries, Shah said this development would limit its domestic macroeconomic growth opportunities, which would have otherwise thrived in terms of being the global manufacturing hubs.
Other highlights of the report include:
The APAC mobile industry generated US$1.3 trillion in economic impact in 2016, a figure that is roughly equivalent to 5.2% of the region’s GDP (gross domestic product);
- In 2016, mobile operators and the ecosystem provided direct employment to approximately 6.4 million people in the region. Economic activity in the ecosystem generated jobs in other sectors, such as companies that deal with microchips, and transport services;
- Contribution in terms of income tax and social security from firms and employees is expected to contribute to public finances of the region’s governments of about US$166 billion in 2016; and
- Multiple SIM ownership has seen a decline in recent years, after increasing steadily in the earlier stages of mobile growth. This is expected to decline out to 2020 as markets become saturated and use of IP messaging apps (over-the-top apps) offering cross-network communication grows.
A full download of the GSMA report’s inforgraphics can be found here.
The Asian mobile Internet economy is growing: GSMA
Asia Pacific to add 600mil new mobile subscribers by 2020: GSMA study
LTE set to become the dominant mobile access technology: Ericsson Mobility Report
For more technology news and the latest updates, follow us on Facebook,Twitter or LinkedIn.