Gartner Says Asia/Pacific Telecom Vendors Have Reasons for Optimism in 2004
After Three Years of Focusing on Cutting Costs, Carriers Will Begin to Focus on Growth, but Results will be Inconsistent in 2004
SINGAPORE, January, 19, 2004 — The Asia/Pacific telecommunications industry will experience an increase in revenue in 2004, as service providers begin to move away from a focus on cost containment, and instead look to growth, according to Gartner, Inc.
Gartner analysts attribute the change in attitude to better economic conditions, improving carrier fiancial performance, and a decline in price competition.
"This will not only to result in new service offerings, but it will also lead to the first growth in telecom investment in the region in five years," said Bertrand Bidaud vice president of Industries at Gartner Asia/Pacific.
Against this background Gartner has produced key telecom predictions for the Asia Pacific region for 2004 covering carriers, equipment and telecom services in the enterprise market. The predictions pinpoint both the region's bright spots and challenges ahead:
In 2004, telecom investment is expected to increase 9 percent from 2003. One sector that will experience increased spending is in Next Generation technologies, bringing voice and data together on the same networks. Increasingly carriers in countries such as China and India, will move straight to Next Generation networks rather than deploy older style switched infrastructure.
Investment will also increase in supporting the rollout of new services such as new high-speed data and video services, but the results of these are unlikely to show through 2004 - and disappointments are likely as carriers struggle with new business models.
During 2004, the Asia/Pacific region will add another 125 million phone connections across fixed and mobile services, approximately a 13 percent increase from 2003 By the end of 2004, there will be 1.1 billion phone users in the region. But this subscriber growth will come at the expense of customer yields which will dampen revenue growth. Revenue growth across fixed and mobiles services combined in 2004 will reach about $17.1 billion, a 7 percent increase from 2003.
The broadband industry will continue to show strong growth in 2004. The Chinese broadband segment built up huge momentum in 2003, making it the fastest growing major DSL market. In China broadband penetration is still relatively low, and the carriers are offering some of the cheapest broadband services in the world , down to $6 a month. Japan is still growing quickly, but it has become an increasing mature market, with around 10 million DSL connections.
In the mobile phone industry, China is one of the most vibrant market in the world. Gartner analysts forecast sales to exceed 70 million units in 2004. The market's sheer size will propel one of the leading Chinese handset vendors into the worldwide top vendor rankings in 2004.
The increased implementation of mobile phone connections will have an impact on the fixed line market. In developing markets, fixed-line carriers are struggling to compete with the explosion in the popularity of wireless or limited mobility wireless local loop services.
Gartner analysts also project a rapid adoption of IP telephony in the enterprise segment in 2004. This will be driven by the need to replace an aging installed PABX base in enterprises. More than half of new telephony lines installed in the Asia/Pacific region in enterprises in 2004 will also be pure IP rather than IP-enabled.
However, while there are many positive trends emerging for the Asia/Pacific telecom region in 2004, Gartner analysts said there will still be challenges.
"Some sectors of the industry, such as long distance and international will continue to feel the pain of over-capacity. The effect of a renewed focus on growth will be inconsistent, and it may not yet pay dividends for many carriers during 2004," added Andrew Chetham, principal analyst for Gartner's Asia/Pacific Telecom and Networking group.
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