4 Years after the Limited 3G Spectrum was auctioned in the 2100MHz band, we’ll take a peek into how we are doing with our competitors in Asia – China and Malaysia on various factors. We are classifying based on the Big 4 Factors that help determine the success of Mobile Data.
3G Network Status
- India – 3G coverage and average data speed remains lowest in Asia. Unlikely to expand given low
capex guidance and balance sheet constraints - China – 3G coverage has already reached ~75%. Average data speed is best in the EM space and comparable to DM markets. Massive 4G buildout ongoing
- Malayasia – 3G networks are already built-out however we see investments remain soft in the LTE space. Thus in our view network pull factor is relatively soft in Malaysia.
SmartPhone Availability
- India – Smartphone penetration is ~17% of population base. Expect it to hit 26% by FY15 end, lowest in Asia.
- China – Smartphone penetration has already touched ~44% levels. Expected to grow at the
steepest pace in EM Asia. - Smartphone penetration had consistently improved and now we see has already reached maturity levels. In our view it
has already crossed inflection point.
Demand for 3G Data Services
- India – No explicit demand push given limited network facility, smartphone availability as well as affordability levels.
Data pricing remain expensive compared to highly compressed voice pricing. - China – Telcos have resorted to handset subsidies to generate data demand. We expect subsidy push to remain soft given regulatory restrictions.
- Malaysia – No explicit demand creation. Data pricing remains relatively expensive in the regional context while no handset subsidy push.
Affordability of 3G Services
- India – User’s ability to raise spending on data is most constrained in EM Asia. Although growing at a brisk rate but will still take 3-4 years to reach to that of Indonesia which is second lowest
- China – Disposable income is fairly supportive and is growing at the fastest pace in Asia. Gap between disposable income growth and telco service revenue growth has widened most in China
- Malaysia – Disposable income levels are highest in EM Asia. However, telecom services affordability remains low owing to higher tariff levels. Telecom services spend as % of GDP disposable income is highest in Asia and thus little room for upside with risk on downside