Published: November 2006
Pages: 360
Price: £795/$1495/€1295
This new report evaluates the real status, opportunities and threats for telecoms companies in Brazil, Russia, India and China. In addition to highly detailed chapters on each market, the report provides a thought-provoking and comparative examination of the BRIC economies, putting opportunities into their current and future context.
Report Summary:
For years the huge markets of Brazil, Russia, India and China (the BRIC economies) have promised much and delivered little. Ongoing political and economic issues have held them back from realising their true potential in the global market. But is all that set to change?
This is evolution not revolution, and change will be progressive. Common characteristics to be found among the four markets include:
- Low penetration rates for mobile, Internet, and fixed-line services, despite decades of foreign investment. No 3G licences yet issued in any of these four markets - expect these to be hotly-contested.
- Poorly-defined regulatory regimes have hindered the existing players, but careful analysis of market rules should allow the most savvy to survive.
Meanwhile, each market presents its own combination of challenges and opportunities:
- China and India are emerging as equipment development and manufacturing power-houses, with leading vendors setting up shop to take advantage of highly-skilled low-cost employee base and access to key regional distribution hubs.
- The Asian market - the Indochina subcontinent in particular - is very poorly served at the moment and will represent the focus for the next major industry expansion effort.
- Russia is less attractive for manufacturers wishing to set up local facilities, but offers excellent prospects for foreign companies wishing to sell to the emerging mobile and fixed-line operators.
- Brazil is a more mature market - competing with Mexico and Argentina to become the major services and equipment manufacturing/distribution hub - but has shown strong growth in recent years as competition begins to bite.
The real opportunities lie in the future, where steady growth in BRIC markets will erode the commercial differences with the established markets of North America, Japan, and Europe.
Effective planning is vital, and impartial, thoroughly researched information is essential to fully appreciate each market's current status as a basis for future development.
That is why International Telecoms Intelligence (ITI), the leading market intelligence provider, has published this new 360-page report: Opportunities for Telecommunications Equipment & Services in the BRIC Economies 2006.
Report Contents:
In addition to highly detailed chapters on each market, the report provides a thought-provoking and comparative examination of the BRIC economies, putting opportunities into their current and future context.
| China |
India |
| That China is the biggest market for electronic communications services should not be surprising. The country has one of the largest populations in the world - estimated at 1,313.97 million as of mid-2006 - and, thanks largely to state planning and state-owned duopolies in the fixed-line and wireless services market, has managed to increase fixed-line and mobile penetration with alacrity. Demand for advanced broadband and other Internet services is booming, despite the tight controls and censorship imposed by the state. China is also benefiting from technology partnerships between the state-owned manufacturers/technology developers and almost all of the leading global players, such as Nokia, Alcatel, Lucent Technologies, Cisco Systems, Ericsson, Siemens, and Intel. China’s own star players are now beginning to beat the foreigners at their own game, with Huawei Technologies, ZTE, Amoi Mobile, and Ningbo Bird winning substantial supply contracts at home and overseas.
At the end of 2005, there were some 350.4 million fixed-line telephone connections in service, primarily operated by the duopoly of China Telecom and China Netcom. An increasing number of connections are actually limited mobility accesses based on Japanese-developed technology, known as the Personal Handyphone System (PHS), which has been augmented for the Chinese market. The technology has proved especially useful in addressing the communications requirements of rural and isolated communities as well as in the major cities where it is difficult to install new lines and cables. The no-frills approach of the limited mobility services also means that equipment costs and service tariffs are low, making it more affordable for econimically-disadvantaged areas to hook up to the national network. Consequently, fixed-line penetration has risen from 11.4 per 100 population in 2001 to 26.6 per hundred in 2005.
China’s mobile subscriber base overtook that of the fixed-line subscriber base in 2003 and is continuing to grow at a phenomenal rate, even before taking into consideration the likelihood that licences to operate commercial third-generation (3G) networks have yet to be issued. Although there is as yet no firm timetable for the licensing of 3G operators, it is widely believed that these licences will be made available early in 2007 as Beijing has said that 3G services need to be available in time for the Olympic Games, to be held in the country in 2008. |
Like China, India has one of the largest populations in the world, at 1,095.4 million as of mid-2006. The country’s electronic communications services market was worth US$19,500 million as of 2005; this represented a year-on-year increase of around 15.9%.
The development of India’s telecommunications market has been implemented in accordance with a National Telecommunications Policy which has provided guidelines for the liberalisation of India’s local fixed-line and regional cellular services markets and, latterly, for the liberalisation of the domestic and international long-distance markets. However, the implementation and management of the scheme has been somewhat haphazard, with a lack of clarity continuing to afflict basic regulatory policy to this day. For instance, private operators continue to be hit by amendments to tax laws, licensing fees, and tariff mechanisms, effectively allowing the state-owned incumbent operators BSNL and MTNL to maintain a dominant position in their respective markets. The third state-owned incumbent, VSNL, enjoyed the benefits of protectionism for many years.
This state of affairs drove away many of the foreign companies that had battled to invest in new Indian fixed-line and cellular operators from the mid-1990s onwards, and a few notable foreign investors now remain, the most obvious example being Hong Kong’s Hutchison Whampoa, although Malaysian operators Maxis and Telekom Malaysia are now beginning to flex their muscles in India.
Despite the considerable success achieved by alternative operators, fixed-line penetration remains very low in India, at around 3.8% as of June 2006. The Indian government aims to increase the combined fixed-line and wireless subscriber base to around 250 million by the end of 2007, up from 92.88 million at the end of 2004, 75.94 million at the end of 2005, and 91.01 million at the end of September 2006. The authorities and impartial observers estimate that investment of between US$70,000 million and US$90,000 million will be required in order to achieve this target, much of it expected to come from the existing fixed-line and cellular operators. |
| Russia |
Brazil |
| With a total population of 142.9 million as of mid-2006, Russia represents another large and underserved market. As in China and India, the fixed-line market is dominated by the state-controlled utility, in this case the Svyazinvest holding company, which owns or controls more than 70 local telephone companies and the principal long-distance operator, Rostelecom. The ongoing process of restructuring Svyazinvest’s holdings ahead of a possible privatisation in “the near future”, as well as expansion and consolidation within the cellular sector, are thought likely to have contributed to the impressive 36.6% growth in the electronic communications services market in 2005, valued at US$25,000 million.
The emergence of a new breed of successful alternative service providers and network operators - among them the Sistema group’s Comstar UTS, independently-owned Corbina Telecom, Gars Telecom, Golden Telecom, PeterStar, and TransTelecom Company - has also contributed to growth in the sector, characterised by a booming demand for broadband and corporate communications services.
Nethertheless, the penetration of basic telephone lines is relatively low, at around 27.6 lines per 100 people at the end of 2005. This disguises the fact that many rural areas and even small towns have little or no exposure to the national telecommunications system, whereas major cities such as Moscow and St Petersburg benefit from extensive and technologically well-advanced networks and therefore have a much higher penetration rate.
A number of telecommunications operators characterise the Russian market as being “unsaturated” and have indicated their intention to continue investing heavily in networks and service provision for the foreseeable future. The liberalisation of the domestic long-distance market in 2006 is also providing an additional incentive for investment. |
With a population of approximately 188.1 million as of mid-2006, Brazil represents the third most populated of the four countries under review. Despite relatively high rates of unemployment and variable degree of exposure to the economic and political turmoil that regularly blights the Latin American region, the country’s gross domestic product (GDP) has been showing an impressive rate of growth in the last four years, buoyed by commensurate growth in the electronic communications services market.
Using data obtained from Brazil’s largest fixed-line and mobile communications operators, ITI estimates that Brazil’s electronic communications services market had been worth US$60,554 million in 2005, up by around 28.7% on the previous year. It is possible that the actual value of the market could be rather higher as a great many of the country’s numerous small value-added service providers, data carriers, and Internet service providers are reticent or tardy in disclosing operating and financial data.
According to the National Telecommunications Agency (Anatel), there were 42.11 million fixed access lines in service in Brazil at the end of 2005, down from 42.38 million in 2004. The decline in the number of fixed access lines is attributable to customer migration to alternative access media, such as mobile phones, ADSL, and VoIP connections. The five main incumbent local telephone companies - TELESP, Telemar, Brasil Telecom, Sercomtel, and CTBC Telecom - account for the majority of fixed lines in service. They are being increasingly challenged by ‘mirror’ operators in each of their geographic markets and also by each other as they finally break free from the restrictions limiting them to their traditional service areas. Long-distance operator, Embratel, has also begun offering a local telephone service, while cable TV operators such as TVA, Net, and VIVAX have also entered the telephony services market. |
Following a comparative overview, the report provides the following details
for each country:
COUNTRY BACKGROUND
Including economic, political and demographic data
TELECOMS REGULATION
Legislation and licensing for fixed and cellular networks and equipment
MAJOR OPERATORS
Contact Details, Ownership, Networks, Revenues, Major Supply Contracts
MAJOR MANUFACTURERS
Ownership, Facilities, Revenues, and Employees (where available)
INDUSTRY ASSOCIATIONS
Overview and remit |
COMMUNICATIONS MARKET INDICATORS
- Fixed-line Market - Operating Results, Lines in Service, Growth & Market Share
- Mobile Market - Subscribers by Operator, Technology, Operator Band
- Pay-TV Market - Including Current Operators, Technology, Market Share
- Internet/Broadband Market
- Telecommunications Equipment Market - Size, Market Growth, Import/Export data (where available)
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