GSMA Intelligence Global Mobile Trends 2017 September 2017 Contents 1 2 3 4 Key takeaways Consumers and Internet Networks mobile unconnected – the other half 5 6 7 Financial Competitive Regional views performance landscape Europe Latin America and cross-sector North America Sub-Saharan Africa competition China Middle East and India North Africa Asia Key takeaways 3 Key takeaways Key takeaways 4 1 5 billion people now use mobile – the highest scale consumer tech worldwide EVOLUTION OF MOBILE SUBSCRIBER PENETRATION Two thirds of the global 8 billion population are now mobile subscribers; mobile has a 7 greater reach than any other technology. 6 However, the rate of growth is slowing. It took four years to 5 5bn move from 4 billion to 5 billion; Q2 2017 reaching 6 billion will take 4 longer still. 3 2 1 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Unique mobile subscribers Population Source: GSMA Intelligence Key takeaways 5 2 5G is attracting hype but, for much of the world, the 4G era has only just begun By 2025, 4G will account for two thirds of the global 5G continues to occupy mobile user base thought space as the next big 70% Percentage of connections thing in mobile. 4G, however, will dominate in volume terms 60% for at least the next 10 years. Between 2016 and 2025, we 50% forecast a net 3.6 billion 4G users will be added, versus 1.2 billion 5G users. 40% Emerging markets are driving 30% growth: India, Indonesia and Brazil will represent 35% of the 4G increase, underscoring the 20% geographic shift in internet users. 10% 0% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2G 3G 4G 5G Source: GSMA Intelligence Key takeaways 6 3 Connecting ‘things’ exponentially increases scale of connectedness 25,000 million 20,000 Consumer segment currently dominates IoT connections but enterprise is set to be key source of growth going forward. 15,000 10,000 5,000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Smartphones Tablets / eReaders PCs / laptops Data terminals IoT Source: GSMA Intelligence, Machina Research Key takeaways 7 4 Paradigm shift in networks needed to realise IoT and 5G potential Power pushed from core to edge & Explosion in heterogeneity Mall City Motorway Rural Aerial networks 5G Small cell Wi-Fi 5G + 4G zone Fibre LPWA LPWA • Decentralised Heterogeneity across many aspects: • Series of mini clouds (data centres) close to • Network planning – pico/small/macro cells, devices/objects/sensors aerial (satellite) • Mesh or peer-to-peer networking between devices • Software controls network functions; white-label hardware • Required for very low latency applications with high bandwidth (cars, healthcare, robotics) • Licensed and unlicensed spectrum Key takeaways 8 5 Telecoms and media are converging but the path to value creation is unclear Convergence has taken several forms since the Telco-media conglomerates may not be the future mid-2000s; the latest M&A boom targets everywhere, but the rationale of a content offer cross-sector assets, the deepest level yet. to pair with core network services is increasingly strong (joint venture, licensing, bundling are all options). Email Presence Video Mobile Product Unified Fixed bundling communications broadband (triple or Directory Voice (+ landline) quad play) services TV Mobility Data fixed-mobile convergence (FMC) Product level Industry level 2005 2009 2015 Key takeaways 9 6 The markets have yet to price in a growth story It remains to be seen whether converged This contrasts with tech: Apple, Google, Amazon, telco-media plays have a long-term positive Facebook and Netflix have collectively gone up impact on growth. So far, investors have yet 3.5× in enterprise value (EV) terms since 2010. to price in a growth premium. Indexed enterprise value 600 Netflix EV indexed (2010 = 100) Facebook 500 Amazon 400 300 Google Apple 200 AT&T Deutsche Telekom 100 Vodafone 0 2010 2011 2012 2013 2014 2015 2016 Note: EV data as of 5 July 2017. Source: Thomson Reuters Eikon, company data Consumers and mobile 10 Consumers and mobile Consumers and mobile Two thirds of the population are connected by mobile 11 The 5 billion mobile subscriber milestone was A further 620 million subscribers will be added reached in Q2 2017. by 2020, reaching almost three quarters of the 200 BarringQ4 0 perhaps radio, it is the most prevalent global population. technology on earth. 2020 Global mobile unique subscribers and penetration 20 Q2 17 5.7bn 5bn Q1 2013 4bn Q1 2010 2020 20 3bn Q2 17 20 Q3 14 72% 200 Q1 7 67% 20 2bn Q3 11 60% 2 200 200 Q 3 Q2 9 50% 200 1bn Q1 7 40% 200 Q3 4 30% 200 Q4 0 20% 10% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Unique subscribers Market penetration Source: GSMA Intelligence Consumers and mobile Asia will drive subscriber growth, accounting for 60% 12 of new subscribers globally Unique mobile subscribers worldwide Net growth in mobile subscribers Q2 2017 – 2020 6,000 million Percentage of global new subscribers of global new Percentage million India 162 26% 620 5,654 China 5,000 128 21% 5,034 Sub-Saharan Africa 99 16% 4,000 Rest of developing Asia 73 12% Latin America 65 11% 3,000 MENA 41 7% North America 2,000 20 3% CIS 14 2% 1,000 Europe 11 2% Developed Asia 2 0.3% 0 Q2 2017 New subscribers 2020 Source: GSMA Intelligence Note: Developed = ‘High’ and ‘Upper middle’ income countries (GNI per capita above $3,956). Developing = ‘Lower middle’ and‘Low’ income countries (GNI per capita below $3,955) as Source: GSMA Intelligence classified by the World Bank Consumers and mobile Reaching the next billion will be toughest challenge yet 13 It took four years to move from 4 billion to 5 billion; reaching 6 billion will take longer still. Years to grow an incremental 1 billion mobile subscribers (1990–2017) 13.0 years 4.0 3.5 3.5 years years 3.0 years years 1st 2nd 3rd 4th 5th Billion mobile subcribers Source: GSMA Intelligence Consumers and mobile Smartphone growth led by Asian and African markets 14 as affordability improves Contribution to smartphone growth Smartphones account for over half of total connections5800 5.7bn globally. 5600 As with subscriber growth, smartphone growth is being5400 driven by developing markets 5200 Five markets will account for more than 40% of the 1.6 billion5000 new smartphone connections by 2020. 4800 Lower cost smartphones from4600 local manufacturers such as Huawei, Oppo, OnePlus and4400 Xiaomi in China, Micromax in India, and now AfriOne in4200 4.1bn Nigeria, are helping to address the affordability barrier. 4000 Q2 2017 India China Nigeria Indonesia Pakistan Other 2020 �� 53% % of total connections 66% �� Source: GSMA Intelligence Consumers and mobile Three quarters of people with a mobile phone 15 already use it for the internet Share of mobile phone owners that access the internet Almost 1 billion more people North America Europe CIS will start using their mobiles to access the internet by 2020. By 83% 88% 77% 84% 69% 81% this time, five-sixths of phone �� �� �� �� �� �� 2017 2020 2017 2020 2017 2020 owners globally will be mobile internet subscribers. Asia Pacific will account for more than half of this growth, mostly in India and China. However, as a proportion of population, Africa will grow the fastest. Latin America �75% � �83% � 2017 2020 Middle East Sub-Saharan Africa & North Africa Asia Pacific �63% � �77% � �60% � �72% � �78% � �85% � 2017 2020 2017 2020 2017 2020 Source: GSMA Intelligence Mobile internet Voice and text only Note: 2017 data is Q2 2017 Consumers and mobile Migration to faster networks is driving engagement 16 and data traffic Percentage of adult consumers who Video to drive global data traffic growth engage in mobile entertainment services 50,000 by network connectivity Petabytes/month Play games 80% 60% 40,000 40% Listen to the radio Watch free 20% online video 30,000 0% 20,000 Reading eBooks Watch live TV or replay TV programmes 2G networks 3G networks 4G networks 10,000 (GSM, GPRS, EDGE, E) (WCDMA, HSPA) (4G, LTE) Nearly three quarters of smartphone users globally watch online videos on their phone and 50% of smartphone users watch or 0 replay live TV on their phone. 2016 2022 Video traffic is driven by YouTube, embedded video and live Video Social networking Other streaming (e.g. Netflix). In the near future, newer applications such as AR/VR, as well as 5G services from 2020, will drive video growth further. Source: Ericsson, GSMA Intelligence Source: GSMA Intelligence Consumer Survey 2016 Note: Other includes software download and update, audio and file sharing. Consumers and mobile Innovation is shifting from smartphones to 17 newer form factors Device ownership (US) Innovation has plateaued in smartphone design and services over the last few years. Smart watch • It is now coming from the surrounding 17% ecosystem of devices connected to smartphones. • Smartphones are now serving as the ‘gateways’ into a variety of other devices such as fitness trackers, smart watches, connected VR Smartphone Fitness home devices and virtual reality devices 7%2 84% tracker (in some cases) that rely on smartphones for 25% control, connectivity and/or processing power. Nearly 30% of mobile owners say that compatibility with companion accessories is ‘very important’ to their next purchase, and an additional 27% say that compatibility, while not Smart home 1 necessarily a deal breaker, is ‘important’. 15%3 1 GSMA Intelligence Consumer Survey 2016, US respondents Source: US ownership data from GSMA Intelligence Consumer Survey 2016, except VR from 2 Includes all VR form factors, not just smartphone-based headsets eMarketer (2017) and smart home household penetration from Statista (2017) 3 Includes digitally connected and controlled devices within a house that can be remote controlled Consumers and mobile Smart speakers seek to resurrect voice 18 Amazon Echo: growing base and skill set The growing popularity of smart home and Installed base, US personal assistants has led to the ‘resurrection’ Q1 of voice as a user interface.