Global mobile connections surpass 5 billion milestone

Brought to you by Wireless Intelligence

The number of global mobile connections surpassed the 5 billion mark this week, according to new Wireless Intelligence data. The milestone comes just 18 months after the 4 billion mark was reached at the end of 2008 and is in line with our earlier forecasts. We predict that the 6 billion global connections milestone will be achieved in the first half of 2012. According to our data, the mobile penetration rate on a global basis at the 5 billion mark was 74 percent, compared to 60 percent at 4 billion. The highest penetrated region is Western Europe on 130 percent, while the lowest is Africa on 52 percent. Eastern Europe (123 percent) is the only other global region to have passed 100 percent mobile penetration.

The main driver of growth continues to be the Asia-Pacific region, which accounted for 47 percent of global mobile connections at the end of 2Q10 (see table). This is up around 5 percent from 4Q08 when the 4 billion connections mark was reached. Growth in Asia-Pacific is due mainly to ongoing growth in China and India – the world’s two largest mobile markets – which offset slowing growth elsewhere in the region in markets such as Pakistan and the Philippines. Growth was slower in mature markets such as Europe and North America, which now account for around 27 percent of global connections, compared to over 30 percent 18 months ago.

On a technology basis, the main trend seen between the 4 billion and 5 billion connections milestones has been the ongoing growth in WCDMA and HSPA connections. WCDMA (family) connections accounted for 12 percent of the global total in 2Q10, up from 8 percent in 4Q08. GSM still accounts for the vast majority of connections in emerging regions such as Africa (92 percent), Eastern Europe (88 percent) and the Middle East (87 percent). However, its share in more developed markets is shrinking as customers migrate to the WCDMA family of technologies, the primary migration path for GSM operators. The global share of GSM connections declined 5 percent to 78 percent during the last billion of connections growth as a result. Since the 4 billion mark was reached 18 months ago, WCDMA has been launched in several large markets, including China, Turkey and Brazil. India is also poised to launch WCDMA later this year following the country’s recent spectrum auctions. WCDMA auctions are also being planned in the last few major markets which have yet to migrate to the higher-speed technology, including Bangladesh and Thailand.

Meanwhile, CDMA connections accounted for around 10 percent of the global total, roughly the same as 18 months ago. However, the share of CDMA connections in the Americas region almost halved over the period to 5 percent as many key regional operators – notably Telefonica – stepped up their migration to GSM/WCDMA. CDMA technology remains strongest in North America where it is used by Verizon Wireless and Sprint in the US, and by Telus and Bell Mobility in Canada. However, many of these operators have confirmed alternative technology roadmaps moving forward.

The extra billion in connections added over the last 18 months has been achieved despite a slowdown in many mobile markets caused either by the aftermath of the global economic crisis or high levels of saturation. The period also saw many operators clean up their subscriber databases by disconnecting inactive SIM cards. Other regulatory measures such as mobile number portability (MNP) and compulsory SIM card registration have also impacted connections growth in recent quarters and will continue to do so in many emerging markets. According to our recent Quarterly World Review (Q1 2010), the number of operators reporting a decline (loss) in connections in 1Q10 rose to 93 sequentially and 70 on an annual basis. In total this represented an 18.9 million sequential connections decline across these operators and a 26.9 million decline year-on-year.

Meanwhile, over 150 operators during the period between the 4 billion and 5 billion milestones launched new networks with 223 additional networks covering all technologies launched over the last 18 months. This included 37 operators launching networks for the first time. Notable new network launches include new Indian operators Uninor, S-Tel and Videocon; new Canadian operators WIND Mobile, Mobilicity and Public Mobile; Vodafone Qatar; Orange Uganda; 2degrees in New Zealand; and Bharti Airtel in Sri Lanka. There were also a number of network mergers, notably Vodafone and 3 in Australia, and Orange and T-Mobile in the UK.

MVNOs were also a significant contributor to connections growth.  According to recent data from Wireless Intelligence’s new MVNO Tracking Tool, there are now more than 600 MVNOs worldwide. The study found that 76 MVNOs commercially launched during 2009 with a further 35 launched to date in 2010. At the current growth rate, the number of MVNOs will surpass the number of traditional mobile operators (MNOs) by mid 2013.

Joss Gillet, Senior Analyst, Wireless Intelligence:

In Europe, operators have long switched their focus to customer retention and value share rather than customer share. As a result, the migration of prepaid users to contract is happening faster than in any other region. In Western Europe, prepaid connections declined by 2 percent year-on-year in 1Q10 while contract connections increased by 7 percent. In North America, the situation is different since operators are using wholesale prepaid offers to counter stalling contract growth. Consequently, North American prepaid connections grew by 19 percent compared to 3 percent yearly growth for contract connections. Meanwhile, the strong focus on data services led to 3G connections stealing growth from 2G connections in mature markets. GSM connections declined by 9 percent year-on-year in Western Europe and by 12 percent in North America, compared to 3G growth of 34 percent and 16 percent respectively. In 1Q10, we found that in both these regions, two thirds of operators’ handset portfolios are 3G-enabled, representing one third of their connections base. In most cases, mobile broadband connections represent a smaller share of operators’ installed base – below 5 percent on average. Consequently, global data ARPU (non-messaging) averaged EUR1.4 in 1Q10 compared to EUR 1.2 a year ago (an increase of 18 percent). We are seeing a steady progress towards data-centric services and revenues, but voice services still remain the primary source of revenue. In emerging markets, data services revenues are gaining momentum, especially in markets with low fixed-broadband penetration, which allows for fast adoption of bundled deals (fixed, mobile, broadband).

Global mobile market share by technology, Q2 2010
Source: Wireless Intelligence

¹ CDMA (Family): cdmaOne, CDMA2000 1X, CDMA2000 1xEV-DO, CDMA2000 1xEV-DO Rev. A, CDMA2000 1xEV-DO Rev. B
² WCDMA (Family): WCDMA, WCDMA HSDPA, WCDMA HSUPA, WCDMA HSPA+
³ Other: TD-SCDMA, TDMA, PDC, iDEN, Analog