During the three months ended 31 March 2010 175 million new subscribers or revenue sources were added, some 70% of which came from the Asia/Pacific region.
China and India continue to dominate the wireless subscriber numbers, accounting for 54% of all net new subscribers in the quarter. However, they are not the sole drivers of regional growth. During the first quarter both Indonesia and Vietnam joined India and China in the top six group of wireless growth markets, the only non-Asian countries in the half dozen being Brazil and the United States. Together these six countries added 112 million mobile subscribers during the three-month period. Meanwhile Western Europe hit an unwanted milestone: for the first time it saw a decline in its wireless subscriber base, albeit by a small amount.
Broadband subscriber growth was distributed more evenly across the regions, with Asia/Pacific ‘only’ accounting for 41% of quarterly additions. Even the more mature markets of Western Europe and North America are continuing to add substantial numbers of subscribers each quarter, each region contributing 16% of the quarterly additions. The top five growth countries were China, the United States, Russia, India and the Philippines, with France, Brazil and Germany all close behind.
While such robust growth in subscribers should be good news for service providers, in truth there was not a lot for CFOs and investors to cheer about. While global annual subscriber growth has continued at a very steady pace, even during the worst of the recession, service provider revenue growth has gradually dwindled. The 1.1% annual revenue growth includes the positive impact of merger and acquisitions. Take away the acquisitions, and revenues are flat.
The 2.1% revenue decline over the previous quarter is also significant. There is some seasonal cyclicality in the market and a drop in Q1 is not unusual, but this drop is substantially bigger than that seen twelve months ago. The recession has not helped, but the main problem is that the big subscriber growth numbers are coming from countries where ARPUs are low and intense competition is pushing them even lower. India has seen an amazing 50% growth in wireless subscribers over the last twelve months, and now has almost 600 million subscribers. However, there is not a single Indian operator in the list of top 30 service providers by revenue. Fierce price competition has had a sharply negative impact on Indian service providers’ revenue growth. For example, Bharti Airtel, the largest Indian operator, achieved subscriber growth of 36% in the past 12 months, but only a 2% increase in revenues. Revenue growth will not return to the global market until companies start to compete on factors other than pricing.
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