Research from Informa Telecoms & Media suggests that the ongoing financial crisis began to have an impact on the global mobile telecommunications sector during the second half of 2008. Informas view is that the slowdown in the growth of global mobile subscription numbers and the device market is likely to accelerate in 2009.
The worlds mobile subscription market grew by 18.5% year-on-year in 2008 (down from 22.5% growth in 2007) and is set to increase by just 12.7% this year, although Informa does note that this reduction in growth is partly due to the effect of natural market development, particularly in Western Europe and USA.
Of more concern to the industry, Informa believes, is the 7% fall it estimates took place in the handset replacement market in 2008. Unsurprisingly, the worlds developed markets will be hit especially hard, with the total device market in Western Europe set to contract by 13% in 2009, and it could take as long as three years for the device market to get back to 2008 sales levels.
The handset market is facing a difficult period, with the average replacement cycle likely to increase by six to eight months in 2009, which would result in a 5% year-on-year decline in the number of total devices sold globally to 1.16 billion, says Informa Senior Forecasting Analystm, Nidhir Maudgalya. And things could get even worse than this, as depending on the extent of the deterioration of global macroeconomic conditions, the year-on-year fall in the number of total devices sold could double to 10% with replacement cycles increasing to up to 12 months.
Informas research suggests thatg there is evidence of a strong regional divide in the impact of the economic downturn. New subscriptions in the emerging markets of Africa and south Asia continue to drive growth and the mobile device market there should remain resilient, albeit with users buying basic and low feature handsets.
India became the worlds largest market in terms of net additions in 2008 for the first time with 102 million new mobile subscriptions over the 12-month period, ahead of China, notes Nick Jotischky, Principal Analyst for Emerging Markets at Informa. But Jotischky does have a warning for those investors looking to escape the saturation of developed markets. He says:
India and other emerging markets have their own difficulties, as mobile operators continue to work out how they can deliver profitability in the face of increasingly brutal competition.
Until now, mobile operators have not been substantially impacted by the deterioration of the economic environment and have shown impressive resilience. But Informa believes that contingency plans are being prepared for the year ahead, with many operators preparing to lower cost bases and downsize their business. Informa adds that handset and network vendors will be affected more than mobile operators in the first instance, as the number of consumers choosing not to upgrade devices will increase. This will place an indirect hit on network investments as growth in data usage is not as sustained as expected,leading to less-than-expected pressure on networks and operators electing not to upgrade networks.
The research is part of Informas World Cellular Information Service (WCIS), a live online database tracking the development of the global wireless industry. The service combines granular historical and forecast subscriptions with key financial and operational performance indicators.
Theres more information about WCIS here. And you can see select 2007-2009 global mobile trends from Informa Telecoms & Media here.