NEW ANALYSIS: More attractive data bundles, free or discounted access to social media apps and falling smartphone prices are encouraging prepaid customers to switch to postpaid plans. A number of mobile operators in Asia have seen healthy increases in their postpaid numbers, which is resulting in significant revenue gains.
Operators say growing demand for 3G and 4G data is a big factor.
In the Philippines, which is 96 per cent prepaid, the two major mobile players saw postpaid revenue grow by double digits this year.
Globe Telecom credited postpaid revenue, up 11 per cent, as the key driver behind its 18 per cent profit jump in the first half of the year. Just 4.75 per cent of its 42.7 million subscribers are postpaid, yet the segment accounted for 39 per cent of total mobile revenue. Its postpaid connections were up 7 per cent from a year ago.
Rival Smart’s postpaid subscribers accounted for 3.8 per cent of its 68.9 million mobile connections but at the end of Q3 represented 20 per cent of its total wireless revenue. Its postpaid revenue expanded 14 per cent in the first nine months of the year while its postpaid base increased 13 per cent.
Thailand’s dtac added almost one million postpaid subscribers in Q3, most of whom were converted from prepaid. That’s a 26 per cent jump from Q2 and 38 per cent higher than a year ago (dtac stopped breaking down revenue by segment in Q2).
Since postpaid ARPU is so much higher than prepaid, a small increase in postpaid users can result in a significant revenue boost. Dtac’s Q3 postpaid ARPU was $18.75 compared to $4.84 for prepaid. Globe’s was $25.73 vs $2.55 and Smart’s was $14.97 vs $2.39 (Q2).
And less expensive smartphones is certainly a key driver in pushing data uptake. Dtac expects smartphone penetration to jump from 34 per cent in Q3 to 37 per cent in Q4 – an addition of 800,000 connections. Smart’s smartphone penetration hit 18 per cent in Q3 and is forecast to surpass 20 per cent by the end of the year.
Dtac is driving smartphone adoption as part of its ‘Internet for All’ strategy by offering attractive smartphone data bundles, aimed mainly at the postpaid segment, said Chavit Sangudomlert, dtac’s head of investor relations.
He told Mobile World Live the plans are encouraging new subscribers as well as existing prepaid customers to move to postpaid plans. “We expect ARPU uplift when subscribers switch from prepaid to postpaid and become smartphone users, which will result in revenue growth in the long term.”
Dtac’s share of the country’s postpaid market is forecast to increase from 35.2 per cent to 37.6 per cent at the end of the year. Its overall market share in Q3 was 30 per cent.
In Q3 it picked up 78 per cent of the country’s new postpaid connections, and GSMA Intelligence forecasts it will sign up 72 per cent of postpaid additions in Q4 after its postpaid base grows 14 per cent.
About 16 per cent of its subscribers are postpaid compared to 11 per cent for market leader AIS and 15 per cent for True Move.
Last quarter Smart accounted for 76 per cent of the country’s postpaid net additions, and GSMA Intelligence predicts it will take a 69 per cent share in Q4, with the connections growing 19 per cent.
Smart’s overall market share in the Philippines is 60 per cent (Q3), with 55 per cent of postpaid connections. Globe has a 39 per cent overall market share and a 43 per cent share of postpaid connections.
Globe’s Raul Macatangay (pictured), VP of postpaid business and devices, attributed its growth in postpaid to the relaunch of its customisable MySuperplan, which offers users more data but doesn’t discount rates.
“We used what we knew about the prepaid market to target shifters, but we deliberately stayed away from playing the price game, knowing that more than anything, our customers seek value,” he told Mobile World Live. “So instead of cheaper plans, we’re giving them richer plans.”
He said the growth in postpaid subscribers will continue since there is still a sizeable addressable market. “The momentum is building and we see a huge opportunity.”
Macatangay said Globe has seen a shift in the postpaid-prepaid ratio over the years. In 2010 it was 2.6 per cent to 97.4 per cent and as of June it was 4.2 per cent to 95.8 per cent. “We expect this ratio to improve further, but not significantly.”