Asia Pacific sees drop in 4Q08 net additions as Christmas period fails to ignite mobile sales

25 March, 2009

The economic slowdown has impacted the Asia Pacific mobile industry hard with the number of new mobile users signed up over the Christmas sales period falling almost 20 million in 4Q08 from 3Q08 - traditionally the slowest quarter in the calendar.

New research from Informa Telecoms & Media showsthat mobile net additions in the Asia Pacific regiondeclined 22.6% from 87.69 million in 3Q08 to just67.91 million in 4Q08. The last Christmas reversalcame in 2002 when net adds fell 5.9% from 26.75million in 3Q02 to 25.17 million in 4Q02.

“Economic woes, subscriber base clean ups in China,Bangladesh and Pakistan, as well as less competitionin Indonesia contributed to the uncharacteristicfall in net additions,” said Nicole McCormick, senioranalyst at Informa.

China alone accounted for more than half of theregion’s total decline in net adds, falling 56.65%from 23.39 million in 3Q08 to just 10.14 millionin 4Q08.

However, the blip in China appears to be a one-offas China Telecom culled 13.3 million inactivesubscriptions in the month of October alone aftertaking control of China's Unicom's CDMA business.

Meanwhile, 4Q08 spelled continued bad news foroperators in Pakistan and Bangladesh with net addsdecreasing by 112.4% and 26.2% respectively comparedwith 3Q08. In both countries mobile growth wasimpacted by the crackdown on unregistered SIM cardsand economic factors.

Pakistan recorded a net loss of almost 300,000subscribers, compared with almost 6 million net addsin 2Q08 and 2.18 million net adds in 3Q08. Indonesiaalso took a hit in terms of growth, with net addsfalling from 14 million in 2Q08 to 13.15 million in3Q08, before more than halving to 6.36 million in 4Q08.

“It came as little surprise that Indonesia’s netadds slowed quite considerably in 4Q08, since thefierce price war ignited by third-ranked playerExcelcomindo in 2Q07 finally eased,” said McCormick.“Moreover, many customers that took on a cheap secondSIM card during the recent promotions, reverted backto a single SIM card in 4Q08.”

Meanwhile, India, Sri Lanka and Vietnam were amongthe few bright spots in 4Q08. India added nearlythree times more new subscriptions than China withalmost 30 million net adds in 4Q08, up 10.7% on3Q08’s net adds of close to 27 million. “Low tariffs,widening network coverage and cheaper handsetsremain the key drivers of mobile growth in India,”said McCormick.

Informa Telecoms & Media warns that Asia’s worseningeconomies spell particularly bad news for countries,such as China, India and Pakistan - and even Thailand,Indonesia and the Philippines, now focusing on ruralcommunities to drive growth.