Archive for March, 2011

New IPTV service for Vietnam

Thursday, March 31st, 2011

A local company Hanelcom has signed a Memorandum of Understanding (MoU) with a Netherlands-based company, CYMTV, to jointly build an IPTV service in Vietnam. To be called HanelTV, the new service will become available for TV (using a Hanel set-top box), PC, smartphone and tablet. The main technology used will be CYMTV’s private cloud streaming product which ensures high-quality video content to be securely streamed over the open internet. HanelTV proposes to offer a wide range of services including live SD and HD channels, as well as video on demand (VOD), news and information services, games, a community portal and 3D content. In addition, it is planned to offer HanelTV to Vietnamese customers living outside Vietnam. CYMTV and Hanelcom will also co-operate on the DVB-T2 platform that is set to be launched in 2012.

Also see:

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Taiwan starts to see a shift in mobile operator market share

Thursday, March 31st, 2011

Mobile penetration rates have reached over 120% in Taiwan with over 27 million subscribers. Although overall growth has fallen to around 5% in a clearly saturated market, 3G subscriber growth reached levels of over 20% in 2010. The three 2G / 3G licence holders Chunghwa Telecom, FarEasTone and Taiwan Mobile are seeing some of the subscriber base that is moving from 2G to 3G, doing so to a competitors’ network.

Of the five 3G licence holders, it is the smaller operators APBW and VIBO Telecom that have made significant gains. In terms of total 2G and 3G net additions for 2010, VIBO achieved 21% and APBW 44% . The market leader, Chunghwa Telecom gained a 28% share of the net additions and FarEasTone 8%. Taiwan Mobile lost 10,000 subscribers during the year.

In a country with around 18.5 million 3G subscribers, Chunghwa Telecom’s 3G market share is 29% compared to overall mobile market share of 35%.APBW’s share of the total market is 10% but that of 3G alone is 15%. Likewise, VIBO’s share of the total market is 7% but that of 3G is 10%. APBW in particular has made significant gains over the past year and had reached close to 3 million subscribers by April 2011.

While APBW and VIBO Telecom show impressive growth and net addition results, they do not report on ARPU and as such it is not possible to determine whether these subscribers are being gained at the expense of profitability. Despite this their market share has increased while the more established operators have seen a decline in market share during 2010. ARPU levels range from NT$625 for Chunghwa Telecom to NT$846 for FarEasTone for those operators reporting ARPU.

For information relating to the telecommunications market in Taiwan, see Taiwan;

Lisa Hulme-Jones: BuddeComm Senior Analyst

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Mobile market penetration in Africa has passed 50% amidst price wars

Thursday, March 31st, 2011

Mobile phones represent more than 90% of all telephone lines in Africa. Market penetration passed the 50% mark in 2010, with subscriber growth slowing to around 15% p.a. However, several individual markets are still growing at 50% p.a. or more and others stand at only single-digit penetration rates. The continent’s most advanced markets have passed the 100% penetration mark.

Although the greatest demand is in the major cities, cellular solutions are also being employed to increase accessibility in rural and other disadvantaged areas. In addition to mobile networks, Wireless Local Loop (WLL) systems have been introduced in a large number of countries for the provision of fixed-wireless services, with CDMA-2000 1x having evolved as a preferred technology. Additional choices are available through satellite-based mobile services such as Globalstar, ICO, Iridium and Thuraya.

The introduction of prepaid services and a steady decline in tariffs has meant that more than half of Africa’s close to one billion people can now afford a mobile phone. However, as lower and lower income groups are being targeted, the declining Average Revenue per User (ARPU) is putting pressure on the network operators’ profit margins. Literal price wars have broken out in some markets where a large number of operators have been licensed. Despite this, international investors are still very keen to enter the market through new mobile licences or shares in existing mobile operations in Africa.

With their superior national coverage and large subscriber bases, Africa’s mobile network operators have built up a level of market power to the extent that they have been called “the new incumbents”. Newly introduced converged licensing regimes have increased the competitive pressure but also allow the mobile operators to branch out into new service segments.

A variety of companies have established themselves as regional major players in Africa’s mobile sector. France Telecom, through its Orange mobile division has also established a presence in 18 African countries, South Africa’s MTN in 16, in addition to several in the Middle East. India’s Bharti Airtel took over 15 of the 16 African operations of Kuwait’s Zain for US$10.7 billion.

MTN’s archrival in its South African home market, Vodacom’s expansion across the continent has been limited to a total of only five countries due to restrictions from the partnership agreement with its majority shareholder, Vodafone which itself operates in three countries.

Millicom from Luxembourg was also among the early investors, operating under the Tigo brand in seven countries.

Orascom from Egypt divested most of its sub-Saharan operations between 2002 and 2005, mostly in markets with low penetration and high growth potential, to concentrate on the more developed North African and Middle Eastern markets. However, in 2008 it established a new subsidiary Telecel Globe to re-enter sub-Saharan Africa, including some of the same markets it had abandoned five years earlier.

Other regional players with major funding from the Middle East include the UAE’s Etisalat under the Moov brand, Warid Telecom, and the Lebanon-based Comium Group. Other African companies that have expanded beyond their home markets include Zimbabwe’s Econet, Maroc Telecom (with backing from Vivendi of France), Libya’s LapGreen and Sudan’s Sudatel under the Expresso brand.

Further consolidation is expected as smaller players are finding it increasingly difficult to compete. But even the bigger pan-African operators have recently become takeover targets for even bigger global players.

Market highlights:

  • Mobile market penetration in Africa has passed 50%;
  • Unsustainable price wars are raging in some countries;
  • Mobile ARPU has bottomed in some markets but is still falling rapidly in others;
  • Some mobile operators are rolling out national fibre optic backbone networks and are entering new service sectors under converged licensing regimes;
  • Subscriber statistics and estimates for 2011/12 for each country;
  • Mergers and acquisitions (M&A) are expected to intensify in an increasingly crowded market.

Top 10 African countries by annual growth – 2010

Country Annual growth
Zimbabwe 168%
Rwanda 80%
Burundi 69%
Mayotte 62%
Equatorial Guinea 52%
Sao Tome & Principe 49%
Central African Republic 47%
Eritrea 46%
Mali 45%
Niger 45%

(Source: BuddeComm based on various sources)

For detailed information, table of contents and pricing see: Africa Mobile Voice Market and Major Network Operators

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Sensis: another missed opportunity

Thursday, March 31st, 2011

When launching its new business strategy aimed at trying to save its declining business, Sensis didn’t come up with a game changing solution instead it send out a more of the same message. In Buddecomm’s opinion this was yet another missed opportunity to look at more serious change.

Simply making the directory offering more digital is not going to save Sensis. As more businesses move online, and more and more people get easy access to the internet – largely driven by the smartphone – it is hard to understand why companies would still want to advertise in the Yellow Pages.

There is certainly a group of customers who are left behind on the information highway and who may find the bundled offering and the new lead generating service attractive, but that group is dwindling. However, those who are familiar with the internet and who have incorporated it into their daily life are unlikely to use Sensis to find the business they are looking for. Again, there will always be a certain niche market for such a service, but that is what it is – a niche market – and that is not the Yellow Pages business model.

The kind of service provided by Sensis is available free – or at least at much lower costs – on the internet and companies like Google have largely replaced the old directories model.

At the risk of sounding like a broken record, the solution BuddeComm has been advocating for close to a decade is to combine the Telstra content businesses (Sensis, Foxtel and BigPond) and turn them into a true digital media business. If they were to be combined these companies should be able to come up with innovative new business models that will not just stop the rot but will enable them to explore new business opportunities.

In the last five years Sensis has lost half the value of its business. This will simply continue, and the smaller the company becomes the more difficult it will be to transform itself into a completely new business.

The reality of a ‘linear’ business model (from printing to online) is that those who have tried to do that in the past have experienced a decline in revenues: music, newspapers, books, video. The same will apply to directories; much more is needed to build a truly digital business.

It looks as though the current strategy is to milk and defend its present business model for as long as possible and hope that those who are left behind on the information highway, and those involved in certain niche markets that rely on the Yellow Pages, will continue to pay the expensive advertising costs that are linked to this medium.

This, in itself, is not a bad strategy but it does indicate that the train is slowly moving towards the terminal.

See: Australia – Telco Company Profiles – Telstra – Sensis Pty Ltd

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USA fixed line continues to flounder

Thursday, March 31st, 2011

The main sector to buck the telecommunications growth trend remains the traditional landline (circuit switched) market. Fixed access lines and revenues have been decreasing, due in large part to increasing competition from wireless voice and data services and more recently due to competition from VoIP services.

By early 2011 US wireline losses were occurring at around 5% per annum, similar to the average global rate of fixed line market contraction. The rate of decline however is skewed against the large telcos, in particular Verizon and AT&T, and is in part offset by the increase in wireline subscribers for some cable companies. Despite the decline in this segment, the telcos’ revenue growth is being underpinned by strong growth in their wireless and broadband businesses and, more recently, in their IPTV services.

Fixed line market subscribers – 2011

FIXED LINE STATISTICS
Fixed telephone lines in service (e) 135 million
Annual fixed line subscriber growth (e) -5%
Major fixed line operators
  • Verizon Communications
  • AT&T Inc
  • Qwest

(Source: BuddeComm estimates: USA – Telecommunications – Key Statistics)

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