Wireless Intelligence Global cellular market trends and insight Q4 2012 December 2012 wirelessintelligence.com • [email protected] • twitter.com/wi 1 Global wirelessintelligence.com Market penetration Market High-speed networks now account for more than 25% of connections 9 120% • World cellular connections in Q3 2012 reached 6.40 billion; in Q4 2012 we estimate the quarter closed at 6.54 billion 8 100% • Connections in the developing world passed the 5 billion mark in Q3 and 7 now comprise almost four fifths (78.9%) of the global total • 3G/4G technologies now make up more than a quarter of global 6 80% connections Connections (billion) 5 60% First LTE Advanced network goes live in Russia 4 • There were 50 network launches during Q4 2012, of which 32 were LTE • (including one LTE Advanced), five DC-HSPA+, nine HSPA+, one HSDPA 3 40% and three WiMAX 2 • There are now 134 live LTE networks worldwide, including seven TD- 20% LTE, three LTE with VoLTE, one AXGP and Yota’s (Scartel) LTE Advanced 1 network in Russia 0 0% 2009 2010 2011 2012 2013 2014 2015 2016 Rapidly increasing mobile data use helping to drive economic growth • Ericsson estimates that total smartphone subscriptions will reach 1.1 billion 55+63+69+75+80+84+87+90 by the end of 2012, and expects them to grow to 3.3 billion in 2018 47+54+60+65+71+75+79+82 • According to the vendor, global monthly mobile data traffic doubled between Q3 2011 and Q3 2012 to reach around 900 PB, and is expected 1% 2% Technology split to grow with a CAGR of around 50% from 2012 to 2018, a 12-fold increase • Research produced by the GSMA, Deloitte and Cisco indicates that 4% 7% 9% 7% doubling of mobile data use leads to an increase of 0.5pp in a country’s 19% GDP per capita growth rate • Ericsson observed that at the end of 2012, the average mobile PC uses around 3 GB of data per month, compared to 450 MB per month for a 2012 30% 2016 smartphone • The vendor says that WCDMA/HSPA now covers more than 50% of the world’s population, up from 45% in 2011, and that by 2017 an estimated 52% 85% of people will have the opportunity to access the internet using WCDMA/HSPA 69% Quarterly forecast accuracy • Our estimates are replaced during the quarter by the actual results 9CDMA (Family) GSM WCDMA+69+19+12+c7 (Family) LTE (Family) Other +52+30+74c reported by the operator and regulatory community • The delta between our estimates at the beginning of the quarter and the actual results for Q3 2012 stood at just -0.35% 2 Africa wirelessintelligence.com Market penetration Market Q3 2011 Q2 2012 Q3 2012 1,500 120% Connections Total 614.4 686.4 713.1 1,250 100% (million) Contract 24.0 27.9 28.9 1,000 80% Prepaid 590.5 658.8 684.5 Connections (million) 750 60% CDMA (Family) 17.2 15.4 14.9 GSM 555.8 610.2 630.3 500 40% WCDMA (Family) 41.4 60.7 67.8 250 20% Net additions Total 29.6 21.6 26.7 (million) 0 0% Contract 0.9 1.7 1.0 38+44+51+57+63+67+71+732009 2010 2011 2012 2013 2014 2015 2016 Prepaid 29.0 20.2 25.7 31+37+43+49+56+61+65+69 Growth rate, Total 5.1% 3.3% 3.9% quarterly 2% Technology split 1% 1% Contract 3.7% 6.3% 3.7% 10% Prepaid 5.2% 3.2% 3.9% 28% Growth rate, Total 19.1% 17.4% 16.1% annual 2012 2016 Contract 17.7% 20.6% 20.6% Prepaid 19.2% 17.3% 15.9% 70% 88% Market penetration 58.5% 64.2% 66.4% ARPU $8.16 $7.64 $7.49 2CDMA (Family) GSM WCDMA+88+10+00+c1 (Family) LTE (Family) Other +70+28+10c 3 Africa wirelessintelligence.com LTE close to commercialisation in South Africa Insight: Foreign investment in Africa rising, further opportunities in the pipeline South African operators’ LTE plans accelerate • Vodacom South Africa’s LTE network was officially switched on; during the While their two largest competitors, MTN and Vodacom, plough ahead with their quarter it expanded coverage from 70 to more than 500 base stations LTE rollout plans, rumours continue to circulate around the future of the two • MTN South Africa announced the commercial rollout of its LTE network, smaller South African mobile operators 8ta (Telkom) and Cell C (Oger Telecom). with over 1,600 base stations already upgraded Bharti Airtel is said to be interested in acquiring either mobile operator. This • 8ta and Neotel are currently conducting LTE trials; both are planning to would further boost the group’s African presence following its acquisition of launch a commercial offering next year Zain’s African assets, and would potentially provide funds for a more aggressive • Cell C has also started LTE trials, however it will not launch a commercial LTE rollout for the operator concerned. service until the “government finalises its position on a national wholesale LTE network” However, within South Africa the messages appear mixed. In October, the government turned down KT’s (South Korea) offer to buy a 20% stake in Telkom, A tough quarter for governments and regulators while outgoing CEO Nombulelo Moholi has rejected the possibility of any tie–up • Egyptian telecoms entrepreneur Naguib Sawiris has launched a $5 billion between Cell C and 8ta, stating that the Telkom Board was not looking at any legal claim against the Algerian government for acting unlawfully in its kind of deal. dealings with Djezzy • The award of the third Senegalese mobile licence to Expresso is under Despite this reluctance, Communications Minister Dina Pule has hinted that a investigation to ascertain whether there were irregularities in the process revised strategy for Telkom could include possible partners in terms of both • Netherland British Company (NBC) successfully challenged the award fixed line and mobile operations. She has presented a number of options aimed of 3G licences in the Democratic Republic of Congo to mobile operators at helping to turn the group around, with the government’s recommendations to Airtel (Bharti Airtel), Tigo (Millicom), Vodacom and Africell (Lintel) be made at the ANC’s conference in late December. • The Kenyan regulator (CCK) is to be disbanded and replaced by a regulator that is free of government and commercial influence as part of the Aside from South Africa, a number of deals point to an inflow of foreign investment Independent Communications Commission of Kenya Bill 2011 in Africa’s telecoms sector. In October Viettel Group purchased a 65% stake in EGOTEL Tanzania – which is thought to be launching a 3G network soon - as Countering the use of fake handsets part of a plan to invest up to $338 million in the country. Furthermore, November • UCC, the Ugandan regulator ordered the country’s mobile networks to start saw investment firm Capcom spend $210 million on a 90.5% share in a merged blocking counterfeit mobile phones from 30th November Nigerian entity, comprising MTS First Communication’s spectrum licence as well • The Kenyan Government’s directive to ban ‘fake’ mobile handsets took as Starcomms and Multi-Links’ CDMA business. effect at midnight on 30th September, beginning with the disconnection of around 845,000 counterfeit handsets from the networks of Safaricom, Airtel In October, Vimpelcom announced its intention to dispose of several of its (Bharti Airtel), yu (Essar Telecom), and Orange (Telkom Kenya) businesses in Africa (and Asia) as part of a rationalisation of its global business. Initial reports indicate that its sub-Saharan African units in Burundi and the Central African Republic as well as its Zimbabwean business will be sold. In addition, December saw Vimpelcom reach an agreement with the Algerian government to acquire a 51% stake in Djezzy. 4 Americas wirelessintelligence.com Market penetration Market Q3 2011 Q2 2012 Q3 2012 1,500 150% Connections Total 975.6 1032.5 1044.4 1,250 (million) 120% Contract 392.2 408.2 413.0 1,000 Prepaid 583.4 624.3 631.3 90% Connections (million) 750 CDMA (Family) 205.9 201.4 196.5 60% GSM 569.7 560.6 557.2 500 30% WCDMA (Family) 167.3 227.7 242.4 250 Net additions Total 25.5 13.6 11.9 (million) 0 0% Contract 9.0 4.2 4.8 59+64+70+74+78+81+83+852009 2010 2011 2012 2013 2014 2015 2016 Prepaid 16.5 9.4 7.0 55+60+67+71+75+79+82+85 Growth rate, Total 2.7% 1.3% 1.2% quarterly 2% 1% Technology split 1% Contract 2.4% 1.1% 1.2% 11% 13% Prepaid 2.9% 1.5% 1.1% 19% 25% Growth rate, Total 11.4% 8.7% 7.1% annual 2012 2016 Contract 11.4% 6.5% 5.3% Prepaid 11.4% 10.1% 8.2% 36% 53% Market penetration 103.1% 108.3% 109.2% ARPU $27.53 $26.97 $27.33 CDMA (Family) GSM WCDMA (Family) LTE (Family) Other * Note: data table includes Northern America, but this is discussed separately on slides 11–12 19+53+25+21+c13+36+39+111c 5 Americas wirelessintelligence.com Still room for growth with almost half of Latin Americans unconnected Insight: Oi in pole position as Brazilian operators firm up LTE rollout plans América Móvil driving connections growth from Mexico down to Argentina Following on from the 2.5 GHz spectrum auction that took place in June, the • In Q3 2012, 147 operators witnessed positive quarterly net additions past three months has seen all four major operators in Brazil set out their LTE totalling 11.0 million connections, while 9 operators recorded losses of plans.