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Ten Telecom Trends in Asia-Pacific Region

Pyramid Research, at its second annual Asia-Pacific Telecom Summit, presented 10 key trends that will take place in the Asia-Pacific telecom sector during 2008.

1. Subscriber growth -- Indonesia's broadband market will have the highest growth rate in Asia at 45 perccent per year for the next five years, leading the region's subscriber growth. China, India, Indonesia, and Pakistan will hold 80 percent of Asia's mobile subscribers in 2012, when regional subscriptions total 2.2 billion. Expect higher churn, less revenue, and consolidation in 2008 in developed markets. Low ARPUs will facilitate a transition to IMS.

2. Mobile data -- Asia-Pacific mobile data revenues will almost triple over the next five years to $110 billion, but increased broadband penetration and flat-rate plans will create significant threats to this growth. The mobile data market will grow, but the spending per user will start to decrease as broadband becomes more available in emerging markets.

3. Mobile advertising -- Competition from free advertising models will serve as a litmus test for future business models in the region.

4. WiMAX -- The scale of WiMAX deployment remains elusive in the region. Market activities in the U.S., Japan, and Korea will determine the ultimate role the technology will play in the pre-4G environment.

5. IPTV -- Despite healthy take-up of IPTV in markets such as Hong Kong, Western Europe, and Korea, profitability with remain elusive. For established operators like PCCW (Hong Kong) and Telefonica (Spain), 2008 will be a crucial year.

6. Handset devices -- China, India, and parts of Southeast Asia will be the few remaining markets driven by organic handset device growth in the Asia-Pacific region. Expect higher churn, less revenue, and consolidation in 2008 in developed markets.

7. Capital expenditures -- Capex by the top 15 global mobile network operators will reach $71 billion in 2007 and gradually decrease by 2 percent per year. Like the number of mobile subscribers, Capex has peaked in most markets. Despite high profitability, emerging market operators must further reduce capex and opex spending as ARPUs dip below $5. Vendors will rely less on large legacy accounts and increasingly look to markets like India, Indonesia, and Bangladesh.

8. Mergers and acquisitions -- M&A opportunities will be limited in the region, and multiple bidders will drive up prices quickly. While diversification is important, beware of overbidding and regulatory issues in emerging markets.

9. Convergence -- fixed-mobile content convergence will be a driver of merger and acquisition activities. The entrance of telecom operators into the convergence space, however, has driven up the price of content, and expensive content can quickly ruin margins.

10. Mobile virtual network operators -- Despite some major failures in the MVNO space, Pyramid Research still sees a niche for the business model. Above all, consumers are price-sensitive, and handsets are crucial. They predict global MVNO subscribers will reach 129 million by 2011.

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