2007 South Asian - Mobile Communications and Mobile Data Markets

This Asia market report covers the 8 economies in the South Asia sub-region. It takes an overall look at the various telecoms markets, together with a particular look at the mobile communications and mobile data markets in each of the economies.

The markets covered include: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.

Of the 1.1 billion mobile subscribers in Asia by March 2007, 245 million of these were to be found in South Asia. The growth of the mobile telephony and data markets across South Asia has been dominated by the strong activity in the more heavily populated countries of the sub-region – India, Pakistan and Bangladesh. There was also surprisingly strong activity in the mobile sector in the strife-torn market of Afghanistan, as a competitive market ensured 100% annual subscriber growth. In fact, it is fair to say that all eight countries in South Asia have been experiencing booming mobile markets.

South Asia mobile markets – subscribers, penetration and annual change – March 2007

Highlights in the individual mobile markets of South Asia include:

Afghanistan

In 2003, the second GSM mobile service in the country was launched, while another two mobile licences were issued in September 2005. The arrival of competition boosted the market. By end-2005, the mobile subscriber base had rapidly moved to about 1.2 million (about 4% penetration). The expansion has continued at around 100% annual growth rate and by early 2007, there were an estimated 2.2 million mobile subscribers. New operator Areeba also had about 250,000 subscribers by early 2007. For the country overview, see chapter 2, page 5.

Bangladesh

Bangladesh ranks among the most densely populated countries on the globe, but its fixed-line teledensity remains the lowest in South Asia. With teledensity at less than 1%, only a relatively small proportion of the population has had access to any telecom facility. Almost 99% of homes lack a telephone and there is a four year waiting list for a fixed-line service. The situation is worse in the rural villages, with more than 90% of Bangladesh’s telephone services located in urban areas. This has set the scene for a massive expansion of the country’s mobile market. There have been a number of consecutive years of strong growth (138% in 2005, 90% in 2006), and growth was continuing at 100%+ coming into 2007. Mobile penetration was still only 16% (20 million mobile subscribers) by March 2007. For the country overview, see chapter 3, page 10.

Bhutan

A country that preferred to remain isolated from the world for a long time, Bhutan has taken steps in recent times to improve its telecommunications capability. To do so it has had to overcome the country’s mountainous landscape. While the country had a basic connection to the outside world as early as 1974, with the introduction of trunk calls between Bhutan and India, it was not until 1999 that television, satellite dishes and Internet services started to appear. The tiny country proceeded to invest relatively heavily – to the tune of around US$27 million – in telecommunications infrastructure between 1996 and 2002 to provide the country with a modern fixed line network. In late 2003, the country’s first mobile service was launched by Bhutan Telecom (b-mobile) and by early 2007 was claiming 64,000 subscribers, giving a mobile penetration of about 3% (ITU reports a higher figure). For the country overview, see chapter 4, page 24.

India

India continues to be one of the fastest growing major telecom markets in the world, with mobile growth being central to the expansion of the sector. Sweeping reforms introduced by successive Indian governments over the last decade have dramatically changed the nature of telecommunications in the country. The mobile sector has grown from around 10 million subscribers in 2002 to more than 150 million (including both GSM and CDMA services) by early 2007. The growth has been on the back of a mix of higher subscriber volumes, lower tariffs and falling handset prices. While GSM technology has remained the dominant technology platform in the market, CDMA shook the market up when it quickly grabbed a 23% market share. Despite the already substantial mobile subscriber base, this represented only around 14% of India’s one billion plus population. Clearly, the mobile industry is looking to continue its strong growth. The country’s telecom regulator, the TRAI, says that the rate of market expansion would increase with further regulatory and structural reform. For the country overview, see chapter 5, page 26.

The Maldives

The Maldives, with its relatively small population of 300,000, can rightly claim an efficient, up to date national telecommunications system, despite it being spread of a large archipelago of islands. As well as operating the fixed-line network, Dhiraagu, the country’s incumbent telco, has also been operating an extensive mobile service. Dhiraagu’s monopoly status was officially set to run out in 2008, but, in 2004, a second mobile licence was issued by the government. The new operator, Wataniya Telecom, launched its service in the second half of 2005. By March 2006, it had signed up 64,000 subscribers. In the meantime, Dhiraagu had also increased its subscriber base to 164,000, having managed to grow by 23% over the previous 12 months. With the increased competition, the overall market had reached an amazing 73% penetration by March 2007. For the country overview, see chapter 6, page 83.

Nepal

Nepal is among the poorest and least developed countries in the world. Amid what has been an unsettled political climate that erupts as a major problem from time to time the country has been moving steadily towards a more liberalised telecom market. This included the incumbent telco losing its monopoly status in the market. By April 2006, over 170 operators had been authorised to provide a wide range of telecom services, including two for basic telephony and two for the all-important mobile telephone service. Mobile services are provided in the country by two operators - Nepal Telecom and newcomer Spice Nepal. With Spice providing some serious competition to the incumbent, the total mobile subscriber base had reached 600,000 by March 2006 (penetration 2%), after the market had expanded by 100% in 2005. This rate of expansion continued and by March 2007, there were 1.2 million mobile subscribers in the country. For the country overview, see chapter 7, page 86.

Pakistan

After a period in which the country slowly transitioned from one dominated by a regulated state-owned monopoly to a comparatively deregulated competitive structure, Pakistan’s telecom sector had finally begun moving and looked set for an era of phenomenal growth. Pakistan’s mobile sector, which had started to grow strongly over the last few years, has been continuing its rapid expansion. After growing by almost 170% in 2005 and 123% in 2006, the mobile subscriber base had reached over 48 million (30% penetration) by early 2007. The government’s reform plans were being progressively implemented and this is certainly starting to have some impact on the market. The country’s four mobile operators have been joined by two new operators - Warid Telecom and Telenor Pakistan - following a decision by the government to issue two additional mobile licences. Both these new operators became very active in the market. By end-2006, after less than two years operation, Telenor had 6.6 million subscribers and Warid Telecom was claiming 7.6 million. For the country overview, see chapter 8, page 89.

Sri Lanka's

Sri Lanka has been demonstrating considerable determination in its efforts to develop the country despite its ongoing political problems. With a modern progressive telecommunications sector high on the list, the sector looked to be well positioned for vigorous growth. The country’s mobile sector expanded by almost 60% in 2006 and by March 2007 mobile penetration was 30%. At the same time, the strong growth in mobile looks very much like it was set to continue. For the country overview, see chapter 9, page 104.

Data in this report is the latest available at the time of preparation and may not be for the current year.