Mobile operators face a depressing reality, Softbank chairman and CEO Masayoshi Son told a capacity crowd at the Mobile World Congress yesterday.
“Subscriber growth has stalled and ARPU is falling - dropping 42% over five years. Mobile data traffic also is growing like hell, which means a lot more capex.”
He said that five years ago operators still had an opportunity to expand penetration, so even though ARPU was in decline, it was okay because subscribers were growing.
“But looking to the next five years subscribers won't grow by ten times any more, just 1.5 times, and ARPU will fall 1.4 or 1.5 times." If you look at the simple mathematics, the two cancel each other out and there is zero growth in profitability.
The result is market values remain flat for the major operators over the past several years. “Investors see the future and see no more growth in market value -- that's the depressing reality.”
He pointed to Cisco mobile data traffic forecasts that see a 30-fold increase in the next five years. But he said if you look out ten years that's 30x times 30x, which is more than a thousand times increase. “So capex is increasing like hell -- only John Chambers will be happy,” he joked.
Yet anther reality, he said, is that “Apple and Google take all the upside and operators are becoming a dumb pipe.”