20.12.2010

Data market to represent 15% of global mobile penetration by 2012

Telecoms operators must review data pricing structures to maintain profitability

The mobile data market will revolutionise the whole telecoms industry in 3–5 years and replace the current voice-based business model. Mobile data penetration is growing year-on-year and is expected to hit 1bn subscriptions in the first half 2012, constituting around 15% of global mobile penetration. Data revenue growth is now the main driver of mobile operators’ total revenue growth. But operators must reconsider their data market pricing policies in order to prevent a dilution of profitability due to the need for capital investment to support growth. These are amongst the conclusions of the Eighth edition of the Altimo Index, a statistical analysis of the relative attractions to investors of mobile telecoms markets worldwide.

Evgeny Dumalkin, Vice-President of Altimo, said: «The impact of the data market in telecoms operators cannot be underestimated. After a successful ‘test-drive’ in developed markets such as the US and Western Europe, 3G networks and data-based business models have been successfully launched into emerging markets. The influence of mobile data on the global telecoms market has increased significantly during 2009–2010, with mobile data traffic surpassing voice traffic on a global basis in December 2009.

“But the mobile data market also presents challenges for operators. Despite being the main driver of revenue growth, mobile data revenues represent on average only 11% of total revenues. Given that mobile data revenues are derived from 80% to 90% of total traffic in the network, the profitability of the current pricing model for mobile broadband must be reconsidered in order maintain profitability”.

• Asia. Asian companies continue to top the Altimo Index. During 2011/12 we will see increased competition among operators and consolidation in these markets along with a fast slowdown in penetration.
   
• Russia and CIS. Driven by data revenue, the Russian market is expected to grow by around 10–15% next year. The recovery of the economy in the CIS and a clearer vision of the future have a positive influence on the attractiveness of the main mobile markets of Kazakhstan and the Ukraine.
   
• Africa. Africa still has room for further development and we will see further penetration growth in the coming years. The penetration growth opportunities along with economic growth in the coming 5 to 10 years could significantly change the investment landscape of Africa.
   
• North America and Europe. The data market is playing an increasingly important role in cash generation for mobile operators, with the increasing penetration of smartphones, netbooks and other devices being the main driver of this growth.
   
• Middle East. The Middle East markets continue to maintain strong positions in the Index, mainly because while the region has oil-based cash flows that lead to high ARPU, there is no need for controlling shareholders to extract cash from telecoms companies. However, generally, these markets remain closed to outside investors.
   
• Latin America. Mexico remains in the top ten due to its having the highest profit margin in the region, despite weak penetration growth. The investment opportunities are moderate except for countries that continue to attract new mobile customers and earn stable profits, such as Peru, Ecuador, and Chile.

Notes to editors

Altimo Index

Altimo is a leading $16 billion international investment group specialising in telecoms and acting in Russia, the CIS countries, and Turkey.

The Altimo Index was launched in March 2007 and is a product of a joint initiative by professors from three leading academic institutions: Cambridge University, London Business School, and New Economic School (Moscow). Its objective is to produce a regular, practical review of the attractiveness to investors of the world’s national mobile telecoms markets. The index is made up of country specific data on the difference between the predicted and actual average mobile spending per capita, earnings, growth in penetration rate, capital expenditure relative to revenue and population.
The Index is updated every six months, and allows Altimo to follow development trends and make reliable forecasts for the future of the mobile industry in main markets worldwide.