In this story IÃ¢â‚¬â„¢ll review and compareÃ‚Â the emerging telecom markets of China, India and Pakistan. Combined together these 3 neighboring countries present one of the fastest growing region for the telecom industry, making them especially attractive for investors and companies. Although the business, technicalÃ‚Â and political environments of China, India and Pakistan vary significantly, there are many common characteristics as well.Ã‚Â Naturally theÃ‚Â telecom and serviceÃ‚Â companiesÃ‚Â are on the look for winning ideas, productsÃ‚Â and services which can be taken from oneÃ‚Â country and applied to the other. In general, China is the undisputed leader in manufacturing and India has the edge on services. Pakistan enjoys a better regulatory environment for telecom, with fewer complications such as spectrumÃ‚Â shortage and competing standards, as in India.
The deals and cooperation among the telecom sector of 3 countries is growing rapidly as can be seen from the frequent announcements in the media. CMPak is a prime example (and one of the most interesting to watch)Ã‚Â which has announced investments ofÃ‚Â over 1 billion US$ in Pakistan. In Research and education, for instance, Huawei provides equipment and training toÃ‚Â University of Eng. & Tech., Lahore. Equipment, R&DÃ‚Â and service deals between China and India are on the scale of multi-billion dollars. All of this has a political angle as well which surfaces at timesÃ‚Â – but this aspect is beyond the scope of this post.
In this part IÃ¢â‚¬â„¢ll present market characteristics, projectionsÃ‚Â and the growth areas in China, Pakistan and India.Ã‚Â In Part 2 of this series I will discuss about the electronics and manufacturing subsectors of the industry. You may also want to see some of my past posts related to this:
- Telecom Growth in China
- Telecom Growth in India
- Low-cost Phones Launched by Nokia and Vodafone
- Challenges of High Growth Mobile Telecom Markets
- China Mobile in Pakistan: Updates (April Ã¢â‚¬Ëœ07)
- Success of Huawei in Pakistan and Beyond
1- The numbers: industry analystsÃ‚Â estimate thatÃ‚Â by 2010 the mobile subscribers will be:Ã‚Â
Ã‚Â * China: from 487 to 900 million
Ã‚Â * India: from 160 to 400-500 million
Ã‚Â * Pakistan: from 58 to 100+ million
2- Rural markets are the focus as urban areas get saturated with phne service. Outside ChinaÃ¢â‚¬â„¢s major cities, less than 30% of the population has mobile phones, and in India, where 72% of the people live in rural villages that mainly lack a mobile network, less than 15% of the population owns a mobile phone. The recent introduction of cheaper phones in India by Nokia,Ã‚Â Vodafone etcÃ‚Â is an example.
3- ARPU fall is higher in China spurring companies to provide value added services. Same trends will follow in India (whereÃ‚Â VASÃ‚Â will be 17% of market by 2010)Ã‚Â and Pakistan – see the article belwo for more.
4- ChinaÃ‚Â will remainÃ‚Â a testbed for newer technologies such as 3G, mobile advertising etc. Innovative products will be adopted quickly, regardless of the source. ChinaÃ¢â‚¬â„¢s fixed broadband access and IPTV market will add to growth.
The emerging markets of China and India get fair amount of media coverage. Sometimes a comparison is also made. HereÃ¢â‚¬â„¢s one recent article titledÃ‚Â Ã¢â‚¬ÂEricsson Aims Deeper Inside India, ChinaÃ¢â‚¬ÂÃ‚Â by Wall Street Journal. WSJ reports about how SwedenÃ¢â‚¬â„¢s Ericsson is targeting more business in India and China and the challenges it faces.Ã‚Â Recently Ericsson signed a $1 billion deal to supply GSM network equipment in China. HereÃ¢â‚¬â„¢s a few points from the WSJ article:
In India, Ericsson Ã¢â‚¬â€ the worldÃ¢â‚¬â„¢s largest wireless-equipment maker by sales Ã¢â‚¬â€ looks set to pick up the majority of an estimated $4.5 billion contract with IndiaÃ¢â‚¬â„¢s third-largest mobile-phone company, Bharat Sanchar Nigam Ltd.
In the Pune, Maharashtra, region of India, Ericsson is working with mobile operator Idea Cellular Ltd. and the GSM Association, an industry body, to develop biofuels using local nonedible crops. By reducing the dependence on more expensive diesel power, Ericsson hopes to lower the cost of rolling out mobile-phone infrastructure to rural areas. Cleaner fuel will also reduce engineer site visits and prolong the life expectancy of generators, the company says.
In China, Ericsson faces two potential threats. While the majority of ChinaÃ¢â‚¬â„¢s mobile phones currently operate on GSM networks, the government and China Mobile are currently testing a homegrown version of third-generation, or 3G, technology known as TD-SCDMA, which differs from the common standard being adopted across Europe and North America. Ericsson only has an approximate 1.4% share of the total TD-SCDMA contract. ZTE Corp. and Huawei are among the local vendors that picked up a large part of the deal. Nomura says that there is a significant risk that TD-SCDMA can become the dominant technology in China, and if this happens, Ericsson wonÃ¢â‚¬â„¢t have the cost advantages it has in other mobile technologies.
Stay tuned forÃ‚Â Part 2 of this series in which the electronics and manufacturing will be discussed.