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Asia calling
Telcos buck the global trend with rising subscriber numbers
 Given the dynamic nature of telecommunications, which demands that operators keep up with ever-changing technological advances and regulatory developments, it’s always been a challenging industry to operate in.
The previous year has yielded mixed earnings results, but some companies, particularly those in India, have performed well and the country remains the fastest growing market for mobile phone services in the world. The Cellular Operators’ Association of India, which represents nine of the main telecommunications companies there, said that a record 7.7 million mobile users were added to GSM-based networks in October. While overall economic growth is likely to decelerate, there’s an industry belief that demand for telecommunications services should hold up even if overall economic growth slows.
India’s Bharti Airtel and Reliance Communications who both made this year’s FA100 list are their country’s number one and two mobile service providers. Analysts CLSA say they are optimistic that India’s mobile subscriber momentum will continue given rising incomes, increasing affordability and tariffs that are among the lowest in the world. Today India is the second-largest market for mobile services after China and the potential for growth is dizzying with CLSA forecasting that subscribers will reach 500 million in 2011. For the year ahead CLSA predicts that subscriber growth for Bharti Airtel, which has more than 65 million customers, should outperform the industry.
New to the FA100 Reliance Communications is looking to expand its GSM and dual-network leverage to grow its 56 million strong subscriber base. In May, 2007 it acquired the UK-based global managed network services provider VANCO, which added $365 million to revenues and brought AVIS, British Airways and Siemens to its stable of customers. The same month Reliance Communications also signed an agreement with Alcatel-Lucent to propel itself into the $16 billion international managed network services industry and enhance the company’s CDMA and GSM networks in India.
While the tough competition, rising inflation and shaky consumer confidence that characterised the telecommunications industry this year is likely to continue, Asia still has impressive figures from which to grow. The International Telecommunication Union (ITU) says the region is host to more than two billion telephones, including 1.4 billion mobile subscribers and has 42% of the world’s internet users.
One of the world’s most successful operators and the top ranking telecommunications company in the FA100 list was China Mobile, which took the number three spot. The company is the mainland’s largest mobile phone operator. It also offers data, IP telephone and multimedia services to its more than 240 million customers. Despite signs of nervous consumer sentiment in other sectors China’s Ministry of Industry and Information Technology reported that mobile subscribers were more than 19% up for the year at the end of September compared to 2007. At the same time the number of subscribers was equivalent to 47% of the country’s population suggesting plenty of room for expansion particularly if spending patterns are boosted by the government’s stimulus package announced in November.
A perennial favourite of the telecommunications sector SingTel found profits hit by the costly launch of Apple’s 3G iPhone. As well as in its home market of Singapore, SingTel brought the iPhone to India, the Philippines and Australia via the operators in which it has interests Bharti Airtel, Globe and Optus. The strong Singapore dollar didn’t help Southeast Asia’s biggest telephone company as it earns approximately three quarters of its sales and two-thirds of pretax earnings from overseas markets. However in November SingTel reported that its year-on-year aggregate mobile telephone customer base in Singapore and its seven overseas markets rose 37%. For the year ahead the company said that it planned to grow business by buying strategic assets in countries such as China and Vietnam and it proved its ability to raise funds in a tight market by securing $710 million in bank credit facilities, which it said it will use for working capital.
At times the retrenchment that affected the sector was more pronounced in the region’s developed areas and analysts at JP Morgan forecast that strong subscriber expansion rates in the rural areas of many Southeast Asian countries will help drive telco’s revenues and offset slower growth in urban centres.
For example, Indonesia and national carrier Telkom Indonesia should benefit from sustained earnings among farmers there due to high commodity and food prices. While only 35 in 100 Indonesians own a handset, a population of 232 million suggests a huge market as people leapfrog landline restrictions for mobile connectivity. This year Telkom Indonesia increased mobile, landline and broadband subscribers, but analysts warn of competition from new entrants and rising operating costs.
Expansion in the Korean market remains a challenge as more than 90% of the population already has a mobile phone. SK Telecom, the country’s largest mobile telephone operator, continued the outward approach favoured by telecommunications operators in developed markets when in June it became Virgin Mobile USA’s second largest shareholder.
| Ranking by revenue |
| Country |
Company |
(million $) |
| HK |
China Mobile |
46,942 |
| CH |
China Telecom |
27,784 |
| SK |
KT Corp |
12,848 |
| SK |
SK Telecom |
12,148 |
| SG |
SingTel |
8,625 |
| ID |
Telkom Indonesia |
6,840 |
| TW |
Chunghwa Telecom |
5,672 |
| IN |
Bharti Airtel |
4,106 |
| IN |
Reliance Communications |
3,208 |
| PH |
Philippine Long Distance Telephone |
3,083 |
| |
| Ranking by revenue growth |
| Country |
Company |
|
| IN |
Bharti Airtel |
59.4% |
| IN |
Reliance Communications |
28.2% |
| HK |
China Mobile |
20.9% |
| ID |
Telkom Indonesia |
14.9% |
| SK |
SK Telecom |
6.0% |
| PH |
Philippine Long Distance Telephone |
5.9% |
| CH |
China Telecom |
1.7% |
| TW |
Chunghwa Telecom |
1.1% |
| SK |
KT Corp |
1.0% |
| SG |
SingTel |
0.2% |
| |
| Ranking by net profit growth |
| Country |
Company |
|
| IN |
Reliance Communications |
545.5% |
| IN |
Bharti Airtel |
88.9% |
| HK |
China Mobile |
31.9% |
| ID |
Telkom Indonesia |
29.3% |
| SK |
SK Telecom |
10.7% |
| SG |
SingTel |
7.5% |
| TW |
Chunghwa Telecom |
7.5% |
| PH |
Philippine Long Distance Telephone |
2.5% |
| CH |
China Telecom |
-5.3% |
| SK |
KT Corp |
-19.7% |
| |
| Ranking by ROE |
| Country |
Company |
|
| ID |
Telkom Indonesia |
41.6% |
| IN |
Bharti Airtel |
37.4% |
| PH |
Philippine Long Distance Telephone |
34.7% |
| HK |
China Mobile |
25.1% |
| IN |
Reliance Communications |
19.4% |
| SG |
SingTel |
17.1% |
| SK |
SK Telecom |
15.8% |
| TW |
Chunghwa Telecom |
13.4% |
| CH |
China Telecom |
11.7% |
| SK |
KT Corp |
11.1% |
| |
|
|
| Share price |
| Country |
Company |
Share price, Nov 1, 2007 |
Share price, Nov 1, 2008 |
Currency |
| IN |
Bharti Airtel |
943.0 |
649.0 |
INR |
| HK |
China Mobile |
157.5 |
67.8 |
HKD |
| CH |
China Telecom |
6.6 |
2.7 |
HKD |
| TW |
Chunghwa Telecom |
56.1 |
54.4 |
TWD |
| SK |
KT Corp |
42,350.0 |
33,000.0 |
KRW |
| PH |
Philippine Long Distance Telephone |
3,005.0 |
1,995.0 |
PHP |
| IN |
Reliance Communications |
790.7 |
220.7 |
INR |
| SG |
SingTel |
4.0 |
2.4 |
SGD |
| SK |
SK Telecom |
212,500.0 |
205,000.0 |
KRW |
| ID |
Telkom Indonesia |
11,150.0 |
5,400.0 |
IDR |
|
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