Most would agree that the Asia-Pacific region is the most attractive growth market for multi-national communications service providers (CSPs) and their partners. The size of the overall mobile communications market in the region is estimated at $329 billion in 2013. But how can margins be maximized and investments appropriately prioritized as the market moves through the next phase of evolution?
CSPs have long realized that a one-size-fits-all approach is not appropriate, but attempts to segment the market based on proximity and market maturity may be misleading.
When Accenture compared consumers’ spending patterns for mobile services with overall economic wealth (as defined by GDP), two distinct clusters in the Asia-Pacific region became apparent, with significant implications for the future strategies of CSPs and their partners.
The first market ‘cluster,’ measured by annual mobile ARPU and annual per capita GDP, includes Singapore, Hong Kong, Taiwan Indonesia, India and the Philippines. Although per capita GDP greatly varied among this cluster, the percentage spend on mobile services had an average of 0.7% of annual per capita GDP. The second market cluster includes Australia, Japan, Korea, New Zealand, Malaysia, China and Vietnam, where spending, on average, is 1.2% of annual per capita GDP on mobile services annually.
Clearly, the economic development of countries does not always strongly correlate with consumers’ relative spend on mobile services. For example, in Vietnam, the average ARPU is 34% higher when compared with India, despite a comparable per capita GDP. And in Japan, where consumers spend about double the amount a consumer in Taiwan spends on mobile services, the per capita GDPs are relatively similar.
Interestingly, population density, which typically drives differences in communication investments and market dynamics, did not strongly correlate with relative spends, according to Accenture’s findings. Instead, customers in Australia, Korea and Japan spend a comparable portion of GDP on mobile services, despite the fact that their population densities are vastly different. Instead, it is more likely that factors driving the variation in mobile spending include the level of competition, extent of alternate fixed services, typical use of mobile services (such as high SMS use in the Philippines versus high data use in Japan and Australia), applied regulatory framework, dominant national industries and the quality of network infrastructure to provide value-add services.