During 2007 and into 2008, the market for pre-paid mobile services has continued to grow more than twice as fast as the post-paid contract market, according to the latest study from Informa Telecoms & Media.
At the end of 2007, there were 2.33 billion prepaid subscriptions in the world, of which nearly 2 percent were accounted for by prepaid WCDMA accesses. Prepaid services generated $241.9 billion in revenues for mobile network operators in 2007.
By far the largest prepaid market was Asia Pacific, with 43 percent of global subscriptions and almost 30 percent of revenues.
The number of people owning multiple SIM cards continues to rise, and at the end of 2008 about 28.9 percent of reported subscriptions worldwide will be accounted for by secondary or tertiary SIM card ownership. Operators may be forced to consider whether issuing SIM cards is a sustainable way of increasing the lifetime value and profitability of individual customers.
Ultimately, understanding prepaid customer's individual value expectations rather than how many SIM cards are in circulation may be a more reliable route to long-term improvements in ARPU and profitability.
Informa Telecoms & Media predicts that by 2013 there will be 3.93 billion prepaid subscriptions, generating revenues of $382.2 billion. Although prepaid subscription growth will slow down to a global CAGR of just over 9 percent from 2007-2013, the prepaid market will still account for over 80 percent of new mobile subscriptions over the period and will continue to outperform contract growth.
In developing regions, there is extensive innovation in terms of designing tailored packages for prepaid customers and as a result prepaid customers are often able to access more advanced services than in developed markets.
However, operators need to balance the need to acquire share of very low-spending customers to increase their prepaid base, versus the need to develop increased value from existing prepaid customers in the long-term.
Differentiation will shift from price to value, and the role of new services that maximize the potential of the mobile handset will be key to growth.
