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May 22, 2009
Four Japanese mobile operators – NTT Docomo, KDDI, Softbank and eMobile – recently applied for licenses for 3.9/4G technology, and to add to the excitement, they also announced they would commit ¥1trn (US$10bn) over the next five years to build out the network. Although $10bn seems like a huge figure, putting it into context it translates into less than 3% of annual mobile service revenue. Considering that operators typically spend between 10-20% of revenue on Capex, and that Japanese operators are mostly finished with setting up their 3G networks, actual spending on 3.9/4G is likely to be much higher. In fact, we believe that NTT Docomo alone will spend close to $8bn on Capex in 2009 (see Capex in Asia-Pacific: Driven by 3G in China, Spending to Rise Despite Global Downturn).
Japanese operators, lead by NTT Docomo, are strongly pushing the transition from 3G to LTE. While Japan’s penetration rate of 87% at year-end 2008 might seem like a low figure compared with other leading markets in the region, such as Hong Kong (131%) or Singapore (139%), more than 98% of subscriptions are postpaid and thus multiple-SIM adoption is difficult to find. This high level of mobile saturation presents a problem to Japanese operators, which also face declining voice ARPU levels due to a price war initiated by Softbank two years ago. One remedy the operators are betting on is increasing demand for data services. There are two clear strategies to drive increased usage: One is to migrate more subscribers to “all you can use” data plans, which bring in higher ARPU. The other is to push mobile broadband (data cards and dongles) more aggressively, something that has not had much traction in Japan to date. Both strategies require additional capacity and bandwidth, which is why the race is on for additional spectrum and network upgrades.
— Tae-Hyung Kim, Analyst
Related content:
Capex in Asia-Pacific: Driven by 3G in China, Spending to Rise Despite Global Downturn
Telecom Insider published February 2009
This report analyzes the drivers that make investing in infrastructure imperative for operators in Asia-Pacific, economic downturn or not. It puts the revenue generated in Asia into a global context and looks at the plans for future Capex in both developed and emerging markets in the region. The report also discusses vendors and which ones will be able to gain market share during these trying times. Three case studies, on NTT Docomo, China Mobile and Bharti Airtel, focus on the Capex plans of the main players in Japan, China and India, providing metrics such as Capex as a percentage of service revenue.
Communications Markets in Japan
Asia-Pacific Market Perspective published in February 2009
The Japanese telecom market generated $120.4bn in service revenue in 2008, an 11.4% increase from 2007 levels, thanks to the strengthened yen; in local currency terms, the market actually contracted 1.2% in 2008. Going forward, this mature market will grow at a CAGR of 3.0% in US dollar terms through 2013. While both fixed and mobile voice revenue will decline, the increasing popularity of mobile data packages will drive mobile data revenue at a CAGR of 9.3% through 2013. This Country Intelligence Report analyzes Japan’s communications, media and technology industries, including key trends, regulatory pressures and the competitive landscape, making it an excellent complement to our Forecast products.
Asia-Pacific Media Forecasts, Q1 2009
Forecasts published April 2009
With telcos and mobile operators increasingly offering TV and video services, Pyramid Research’s Media Forecasts are designed to provide competitive intelligence on the pay-TV and mobile TV dynamics for 60 countries as well as regionally and globally. The Media Forecasts track demand patterns for free and paid TV services over terrestrial, satellite and mobile platforms worldwide, providing market share information at both the technology and operator levels as well as five-year adoption and revenue projections.
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