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Wireless Intelligence
Global cellular market trends and insightQ3 2012
September 2012
wirelessintelligence.com • [email protected] • twitter.com/wi
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wirelessintelligence.com
57+65+72+78+84+88+92+94GlobalHSPA and LTE increase their share of global connections• WorldcellularconnectionsinQ22012reached6.3billion;inQ32012we
estimatethequarterclosedat6.4billion• GlobalHSPAconnectionspassed900millionandweexpectthemtoreach
1billionduringQ3,therebyaccountingformorethan15%oftotal• ThenumberofLTEconnectionsworldwidepassed25millionduringQ2
Mobile broadband networks make up 100% of launches in Q3 • Therewere36networklaunchesduringQ32012,ofwhich15wereLTE
(includingthreeTD-LTE),18HSPA,twoEV-DORev.BandoneWiMAX• Therearenow97liveLTEnetworksworldwide(includingeightTD-LTEand
oneAXGP),notincludingMTSUzbekistan’sservicewhichwasshutdownduringQ3
iPhone 5 heats up smartphone battle; Apple and Google almost level on apps• Googleannouncedthatitnowactivatesmorethan1millionAndroid
devicesperday,andhasreachedatotalof400millionactivatedworldwide• Applesoldmorethan5millionofitslatestsmartphone,theiPhone5,
withinthefirstthreedaysofthedevicegoingonsale• Meanwhile,Samsungsoldmorethan20millionofitssignature
smartphone,theGalaxyS3,inthe100daysafteritsreleaseinMay2012;thecompanyistargetingatotalof30millionsalesbytheendof2012
• NokialaunchedtwosmartphonesusingthenewWindowsPhone8operatingsystem,althoughthephoneswillnotgoonsaleuntilQ42012
• AppleannouncedinitsQ32012earningscallthattherewerenow650,000appsintheAppStore(including250,000specificallydesignedfortheiPad),upfrom600,000inApril
• Meanwhile,GooglereportedinJunethatitwasnotfarbehindwith600,000AndroidappsnowavailablethroughGooglePlay
Quarterly forecast accuracy • Ourestimatesarereplacedduringthequarterbytheactualresults
reportedbytheoperatorandregulatorycommunity• Thedeltabetweenourestimatesatthebeginningofthequarterandthe
actualresultsforQ22012stoodatjust-0.37%
47+54+60+67+72+77+81+849 120%
8100%
7
80%6
2009 2010 2011 2012 2013 2014 2015 2016
60%5
40%
4
20%
3
2
1
0 0%
Con
nect
ions
(bill
ion)
Market penetration
Technology split
CDMA (Family) GSM WCDMA (Family) LTE (Family) Other
9+69+19+1+2+c7+52+30+7+4+c2012 2016
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wirelessintelligence.com
38+44+51+58+63+67+70+73Africa
Q2 2011 Q1 2012 Q2 2012
Connections(million)
Total 584.4 664.4 688.3
Contract 23.5 25.7 26.9
Prepaid 560.9 614.1 633.8
CDMA(Family) 17.1 16.6 15.6
GSM 531.5 594.2 612.1
WCDMA(Family) 35.8 53.6 60.5
Netadditions(million)
Total 16.8 23.4 23.9
Contract 0.9 0.5 1.2
Prepaid 15.9 11.9 19.7
Growthrate,quarterly
Total 3.0% 3.7% 3.6%
Contract 4.1% 2.0% 4.8%
Prepaid 2.9% 2.0% 3.2%
Growthrate,annual
Total 18.4% 17.1% 17.8%
Contract 17.6% 13.7% 14.4%
Prepaid 18.4% 12.7% 13.0%
Marketpenetration 56.0% 62.5% 64.4%
ARPU $8.50 $7.96 $7.95
31+37+43+50+56+61+65+691,250
1,500
1,000
750
2009 2010 2011 2012 2013 2014 2015 2016
500
250
0
Con
nect
ions
(mill
ion)
Market penetration
120%
100%
80%
60%
40%
20%
0%
Technology split
CDMA (Family) GSM WCDMA (Family) LTE (Family) Other
2+88+10+0+0+c1+70+28+1+0+c2012 2016
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wirelessintelligence.comAfricaInvestment in mobile broadband beginning to pay dividends
Data growth showing promise thanks to modern network deployments• 60%oftrafficonVodacom’sSouthAfricannetworkisduetomobile
broadband;smartphonetrafficisgrowing10timesfasterthananyotherdevice,nowaveraging92MB/smartphoneuser/month
• Vodacomhas16millionactivedatausersacrossAfricaasofQ22012(from50millionconnectionsintotal),up45%year-on-year;theoperator’spriceperMBhasdecreasedby18%overthesameperiod
• MTCNamibiareportedsignificantusageofitsrecentlylaunchedLTEnetwork;byAugustithadsignedupjust1,000users,howevertheywereconsuming23%ofalltrafficatanaverageof1.6GB/device/day
• TheCEOofTelecel(Orascom)ZimbabwenotedthatsinceAprildatarevenuehasexceededSMS/messagingrevenue
3G and LTE upgrade investment remains strong• SafaricomKenyanotedthat400,000smartphoneswereinuseonits
networkasofQ1;inQ275%ofthemarketusesSafaricomdevicestoaccesstheinternetfollowinga42.2Mb/supgradeinhightrafficareas
• EtisalatEgyptplanstoinvest$500milliontolaunchLTE;MTNSouthAfricamaylaunchLTEbyend-2012followinga200basestationtrial
• VodacomDRCcommencedits$25million3GrolloutinSeptember,whichwillsee350basestationsinstalledbeforetheendoftheyearinamarketwithjust25%penetrationandnoother3Gnetworks
Piecemeal M&A offers an alternative to regional deals• EssarGroupappointedBNPParibastosellits72%controllingstakeinyu
(EssarTelecom)inKenya,andlaterconfirmedthatthemobilearmrequiresupto$250millionovertwoyearstogrowthebusiness
• TheTunisiangovernmentannounceditsintentiontoselloffits25%stakeinTunisiana(Wataniya)
• TheAlgeriangovernmentconfirmedtalksconcerningthefutureofDjezzyarestillcontinuingasitlookstore-nationalisea51%stake.Earlierthisyear,VimpelComagreedtoasale,buthasbeenunabletoagreeonavaluation
Insight: Services, affordable devices the key to unlocking Eastern Africa
Thelonger-termprospectsforEasternandMiddleAfrica–whichwillaccountforthemajorityofAfrica’sgrowthoverthenextfiveyears–arestartingtoimprovethanks to continued investment and targeted services. In Tanzania, market-leaderVodacomannouncedplanstoenhanceitsruralcoverage,onwhichitwillspendTZS120billion($77million)in2012alone.ThecompanyalsosawgrowthinitsM-Pesamobilemoneyservice,up121%annuallyto3.6millioncustomers,representingabout40%ofitstotalconnections.M-Pesanowaccountsfor71%ofVodacomTanzania’sdatarevenue.
Tigo (Millicom) revealed a $100 million network expansion plan in August,spreadingacrossall26regionsofTanzania,giving it the largest2Gcoveragefootprint in the country to date. Fourth-placed Zantel (Etisalat) is rolling out3G and mobile broadband services. Zantel’s aim to achieve 20% marketshare by 2014, up from7%currently, comes despite currentQ2 losses dueto unsustainable competition. Vodacomhowever noted an ‘improved pricingenvironment’andinSeptemberslashedoff-netvoicecostsby50%onanew‘Bonga’tariff-suggestingthesmalleroperatorsarestillfindingtheirfootinginapreviouslyprice-unstablemarket.
InKenya,Safaricom’swell-placedbetonsubsidisedlow-costAndroiddeviceshaspaidoff.AtKES8,000($100),theHuaweiIDEOSsmartphonesold210,000units intheyearprior (amajorityshareoftotalon-networksmartphones)andusage accounted for 20% of all customer data volumes. The company iscapitalisingonthewaveofenthusiasmfordataservices–withdatacustomersgrowing31%year-on-yearto4.6million(of19.1millionconnectionsintotal)–byinvestingincapacity,IPbackhaulandareal-timebillingbackendtoincreaseitsagilityinthemarket.Ugandaexhibitsasimilarpattern–an$80millionnetworkinvestmentpromisedbyyear-endfromMTNtoimprovequalityanddriveruralcoverage.Meanwhile,Airtel(Bharti)willfocusonits21Mb/sHSPA+services,availablein30Ugandantowns.Interestingly,despitejust42%penetration,theregulatorUCCnotedthatsecond-SIMpurchasesdominatednewadditionsinthefirsthalfoftheyearwithonlyamarginalnumberofnewsubscribers.
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wirelessintelligence.com
59+64+70+76+80+83+86+87Americas
Q2 2011 Q1 2012 Q2 2012
Connections(million)
Total 950.0 1,019.6 1,033.7
Contract 393.2 415.6 419.9
Prepaid 556.8 594.7 604.3
CDMA(Family) 205.4 204.6 202.4
GSM 564.9 563.4 560.3
WCDMA(Family) 150.3 212.1 228.2
Netadditions(million)
Total 21.2 19.3 14.1
Contract 9.0 5.7 4.3
Prepaid 12.3 10.6 9.6
Growthrate,quarterly
Total 2.3% 1.9% 1.4%
Contract 2.3% 1.4% 1.0%
Prepaid 2.3% 1.8% 1.6%
Growthrate,annual
Total 11.0% 9.8% 8.8%
Contract 12.1% 8.2% 6.8%
Prepaid 10.3% 9.2% 8.5%
Marketpenetration 100.6% 107.2% 108.4%
ARPU $27.62 $27.19 $27.09
*Note:datatableincludesNorthernAmerica,butthisisdiscussedseparatelyonslides11–12
55+60+66+73+77+81+85+87150%
1,250
1,500
1,000
120%
750
2009 2010 2011 2012 2013 2014 2015 2016
90%
500
60%
25030%
0 0%
Con
nect
ions
(mill
ion)
Market penetration
Technology split
CDMA (Family) GSM WCDMA (Family) LTE (Family) Other
19+53+25+2+1+c13+36+39+11+1+c2012 2016
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wirelessintelligence.comAmericasSmartphone penetration ramping up across Latin America
A mixed picture as slowing growth for Chile and Mexico weigh on the region• LatinAmericamaintaineditspositionasthethird-fastestgrowingregionin
Q22012,behindAfricaandAsia• Connectionsgrowthintheregionslowedto11%year-on-yearinQ22012,
down1.7ppcomparedtoQ22011;atcurrentrates,weforecastthatannualgrowthwilldropbelow10%inQ42012
• RegionalpowerhouseBrazilmaintainedstrongconnectionsgrowth,postinganannualincreaseof18%year-on-yearinQ22012–itsgrowthratehasshownlittlevariationoverthelastfourquarters;ArgentinaandPerubothexperiencedanincreaseinannualgrowthratesyear-on-year
• Anumberofcountriessawstrongslowdownsinyear-on-yeargrowth;Chilewasdownby10.6pp,Mexicoby8.0pp,Colombiaby4.4pp,andEcuadorby6.9pp,partlyduetoachangeinreportingdefinitionsbyAmericaMovilwhichexcludedanumberofinactiveprepaidsubscribers
Smartphone penetration increasing rapidly• TelefonicaGroupsawsmartphonepenetrationintheregionreach10%of
connectionsinQ22012,upfrom4%ayearearlier• BrazilianmarketleaderVivosawsalesofsmartphones(includingdata
plans)tripleduringtheyearendingQ22012• Meanwhile,rivalTIMachievedsmartphonepenetrationof35.2%byQ2
2012,up20ppyear-on-year
Governments step in to avoid market failures• InApril,Haitel’sCDMAnetworkwasshutdown,andthecompanyofficially
wentintoreceivership(undercontroloftheHaitianGovernment)withdebtsofaround$80million
• InJuly,theGovernmentofHondurasintervenedtotakecontrolofthecountry’sailingstate-ownedHondutel,replacingitsCEOwithaspecialcommitteeafterdesignatingtheoperatortobein“financialcrisis”
• InSeptember,havingcancelledanauctionforthe25%of3Gspectrumthatitstillcontrols,Argentina’sGovernmentnowplanstogointobusinessitself,utilisingthe3Gspectrumthroughstate-ownedcompanyArsat
Insight: Anatel plays hardball in Brazil
TheBrazilianregulatorAnatelhasitseyesetongearingupthenationaltelecomsinfrastructure for a series of sporting events over the coming years that willshowcasethecountrytotheworld, includingtheConfederationsCup(2013),FIFAWorldCup(2014),andtheOlympics(2016).InJune,itstartedallocatingspectrumforLTEvia theauctionofspectrum in the2,500MHzband,and inAugust itannounced its intention toauctionoffblocksof700MHzspectrum(currentlyusedby televisionbroadcasters)byDecember2013.However, thisspectrumwillnotbeavailableforuseuntil thedigitalTVswitchover,which isplannedforJune2016.
InJuly,Anateltookaggressiveactionovertheoperators,suspendingTIM,OiandClarofromofferingnewcontractsinanumberofstatesduetoconcernsoveragrowingnumberofcomplaints related toservicequality.TheBrazilianmarketcontinues toexperiencestrongconnectionsgrowth;annualgrowth inQ22012pickedupanadditional0.2percentagepointscomparedtoQ22011.However,whencoupledwithfast-growingsmartphoneandmobilebroadbanduserbasesthistrendisleadingtonetworkcapacitychallengesthattheregulatoraimstomitigate.TIM,whichwassingledoutastheworstoffenderbyAnatel,revealedthatsmartphonesalescomprised79%oftotalhandsetsalesduringQ22012,upfrom54%inQ22011.
Anatel’sbanwasonlyliftedinearlyAugustfollowingitsreceiptof“satisfactoryassurancesthattheirinvestmentplanswillrectifythepoorqualityofserviceandpatchycoverage”.The impending launchofLTEservicesbyall fourBrazilianoperatorswillhavegonesomewaytoplacatingtheregulator,whileWi-Fioffloadalsoappearstobeamethodofchoice.InSeptember,TIMannouncedthatithadsignedanagreementwithWi-FicarrierLinktelCorporate,withwhichitaimstobring10,000Wi-Fihotspotsonline“inareaswithknownissueswhereitcomestohightrafficvolumes”bytheendof2012.
TocompoundmattersfurtherforBrazilianoperators,Anatelhasalsoindicateditisconsideringafurthercutinmobileterminationrates,tobeimplementedinJanuary2013.
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wirelessintelligence.com
48+58+66+73+80+85+88+91Asia
Q2 2011 Q1 2012 Q2 2012
Connections(million)
Total 3,162.6 3,449.5 3,539.8
Contract 540.3 587.7 604.0
Prepaid 2,622.3 2,856.5 2,929.2
CDMA(Family) 301.0 319.1 325.2
GSM 2,493.6 2,621.6 2,660.3
WCDMA(Family) 322.5 431.0 463.2
Netadditions(million)
Total 115.9 102.2 90.3
Contract 16.6 16.1 16.3
Prepaid 99.4 80.8 72.6
Growthrate,quarterly
Total 3.8% 3.1% 2.6%
Contract 3.2% 2.8% 2.8%
Prepaid 3.9% 2.9% 2.5%
Growthrate,annual
Total 19.2% 13.2% 11.9%
Contract 12.2% 12.2% 11.8%
Prepaid 20.7% 13.2% 11.7%
Marketpenetration 75.2% 81.4% 83.3%
ARPU $9.69 $9.13 $9.22
48+58+67+75+82+88+93+974,000
5,000
3,000
2,000
2009 2010 2011 2012 2013 2014 2015 2016
1,000
0
Con
nect
ions
(mill
ion)
Market penetration
120%
100%
80%
60%
40%
20%
0%
Technology split
CDMA (Family) GSM WCDMA (Family) LTE (Family)TD-SCDMA Other
9+74+14+2+1+0+c8+57+23+6+6+0+c2012 2016
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wirelessintelligence.comAsiaLTE gains traction in Asia as VoLTE services kick off
LTE makes rapid inroads in South Korea and Japan; India suffers slowdown• LTEconnectionsinSouthKoreapassed7millionduringQ2(reaching15%
marketpenetration)and3.7millioninJapan(3%penetration)• TotalconnectionsgrowthinIndiacontinuedtoslow,hitbyBSNL,MTNL,
LoopMobile,TataDOCOMOandVideoconreportingQ2declines• RegionalsubscribergrowthwasfurtherimpactedinQ32012by
theremovalofover20millioninactiveconnectionsbyRelianceCommunicationsIndiaandthelicencecancellationofMTSUzbekistan
Tower assets on the block as operators look to cut debt• BhartiAirtelisplanninga$1billionIPOofitstowerbusinessBhartiInfratel• RelianceCommunicationsalsoconfirmeditplansanotherattempttofloat
RelianceInfratel;BSNLisalsoconsideringdemergingitstowerassets• Indosat(Qtel)completedthesaleof2,500towersfor$406million
VoLTE arrives in South Korea; 34 live LTE deployments in the region• Voice-over-LTE(VoLTE)serviceswerelaunchedinSouthKoreabySK
TelecomandLGUplus;rivalKTintendstoalsolaunchVoLTEimminently• Theregionreached34commercialLTEnetworksfollowinglaunchesby
Optus(SingTel)Australia,IT&E(PTI)Guam,ChinaMobileHongKong(TD-LTE),SmarToneHongKong,SoftBankMobileJapan(FDD-LTE),au(KDDI)Japan,OmantelOman,Smart(PLDT)PhilippinesandStarHubSingapore
• VodafoneHutchisonlauncheddual-carrier42.2Mb/sHSPA+inAustralia,whileGeocell(TeliaSonera)inGeorgialaunched21.1Mb/sHSPA+
Indian 2G auction postponed yet again; Uzbekistan terminates MTS• India’sSupremeCourtpostponedthere-auctionofcancelled2Glicences
untilJanuary2013-theDoTnowplanstobegintheauctioninNovember• MTSUzbekistan’slicencewascancelledinAugustinadisputebetween
theoperatorandtheUzbekauthorities• Myanmarannounceditwillopenitsmarkettoforeignoperatorswithtwo
additionallicencesexpectedtobeissuedinlate2012/early2013
Insight: Political troubles continue to dog MTS
Most Russian operator groups are adept at managing the frequent politicalinterferenceintheiraffairsthatcanoftencatchoutunsuspectingforeignplayersoperatinginEasternEuropeandpartsofAsia.Forexample,WesternEuropeanbasedoperatorsTelenorandTeliaSonerabothspent thebestpartof the lastdecadeinvariouslegaldisputeswithAsianandEasternEuropeanpartners.ButevenRussiangroupscanfindthemselvescaughtoutbypoliticalmanoeuvrings,such as in late 2010whenMTS found itself on thewrong end of a disputewith theTurkmenistanauthorities that saw its licence indefinitely suspended.However,positivesignsinthedisputebegantoemergeinMay2012andbylateAugusttheoperationshadresumedwithmanyformercustomersreactivatingtheirservices.
However,thesituationinTurkmenistanwasquicklyfollowedbyanevenmoreextraordinaryturnofeventsforMTSinneighbouringUzbekistan.MTSstatedthatithasbeenthetargetofblatantharassmentbytheUzbekauthorities“withthethinly-veiledpurposeofdestroyingthebusinessandexpropriatingitsassets.”MTSclaimedtheauthoritiesaccusedMTSUzbekistan’smanagementof“nearlyeveryfinancialcrimethatexists”andundertaking“unlicensedactivitiesaspartofacriminalgroup.”MTSwentontoaccusetheUzbekauthoritiesofcarryingouthumanrightsviolationsof itsemployees including“interrogationswithoutaccesstolegalcounselandthreatsofphysicalcoercion.”WhetheraresolutionwillbepossibleforMTSinUzbekistanremainstobeseen,thoughinlightoftheaccusationslevelledbyMTSitwouldappearthatareproachwiththeauthoritiesremainsalongwayoff.IthasalreadyprovedtobeacostlydisputeforMTSwiththegrouppostingalossinQ2duetoa$1.1billionwrite-offofitUzbekassets.
WithformerinternationaloutcastMyanmartakingstepstoopenitsmarkettoforeignoperators itservesasa timely reminderof thepotentialpolitical risksinvolved. Perhaps it is therefore unsurprising that another Russian operatorgroup,VimpelCom,hasalreadybeenlinkedwithreportsthatitisinterestedinentering themarket - ashasVietnam’sViettel, anothergroupexperienced inoperatingindifficultpoliticalenvironments.WeexpectmostWesternEuropeanoperatorstosteercleardespitetheopportunitytoenteroneofthelastlargelyuntappedmobilemarketsintheworld.
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wirelessintelligence.com
86+87+90+92+95+97+99+100Europe
Q2 2011 Q1 2012 Q2 2012
Connections(million)
Total 976.4 997.8 1,002.2
Contract 359.5 380.2 385.2
Prepaid 615.1 615.8 615.2
CDMA(Family) 6.4 7.1 7.3
GSM 673.5 640.6 627.7
WCDMA(Family) 295.5 348.7 365.2
Netadditions(million)
Total 7.2 -3.2 4.4
Contract 5.4 4.4 5.0
Prepaid 1.8 -7.7 -0.6
Growthrate,quarterly
Total 0.8% -0.3% 0.4%
Contract 1.5% 1.2% 1.3%
Prepaid 0.3% -1.2% -0.1%
Growthrate,annual
Total 2.6% 3.0% 2.6%
Contract 5.7% 7.4% 7.1%
Prepaid 0.8% 0.4% 0.0%
Marketpenetration 131.6% 134.3% 134.9%
ARPU $20.16 $19.13 $19.30
64+65+67+69+71+72+74+75150%
1,250
1,500
1,000
120%
750
2009 2010 2011 2012 2013 2014 2015 2016
90%
500
60%
25030%
0 0%
Con
nect
ions
(mill
ion)
Market penetration
Technology split
CDMA (Family) GSM WCDMA (Family) LTE (Family) Other
1+59+39+1+0+c1+37+51+11+0+c2012 2016
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wirelessintelligence.comEuropeMobile broadband accounting for a quarter of European connections
Growth in the East helps region hit 1bn subscribers for the second time• Europeagainpassed1billionconnectionsinQ2afterfallingbackinQ1• Ofthe183activeoperators,143witnessedpositivequarterlynetadditions
representingatotalof8.3millionconnections,while40operatorsrecordedsubscriberlossestotalling4.0million
• ThelargestgainswererecordedbyTele2(Russia)with693,000netadditions,followedbyT-Mobile(536,000)andPlay(525,000)inPoland
• Vodafonesawthebiggestsubscriberlosses;thetransferof1millionconnectionstoanMVNOledtoa655,000declineinGermany,whilethedisconnectionof400,000inactivesubscriberscontributedtoa639,000netdecreaseinSpain
Mobile broadband booms as slower data connections are phased out• InQ22012Europepassed250millionHSPAconnections,withthe
technologynowrepresentingmorethanaquarterofsubscribersinEurope• Therearenowmorethan1.5millionLTEsubscribersinEurope,afigure
whichweexpecttoincreaseto2.5millioninQ32012,bywhichtimeWCDMAwillrepresentlessthan10%ofregionalconnections
Smartphones dominating handset sales• VodafonereportedthatsmartphonepenetrationacrossitsEuropean
operationswas28.7%inQ22012• SmartphoneconnectionsatMovistarinSpaingrew25%year-on-yearto
7.2millioninQ22012,apenetrationlevelof34%• IntheUK,O2’ssmartphonepenetrationwasup8ppto42%inQ22012,
butstilltrailedVodafone,whichreported46.5%• MTSRussiareportedthat17.2%ofthephonesonitsnetworkwere
smartphonesinQ22012,afigureitexpectstobe20%byyear-end
Prepaid growth flat as smartphone adoption drives contract growth• With615millionconnectionsinQ2,year-on-yeargrowthinprepaidwasflat• However,contractconnectionsincreased7%onQ22011to385million
Insight: iPhone 5 shakes up LTE market as UK 4G finally gets green light
ThelaunchoftheiPhone5inSeptemberlookstobeasignificantpointintheshapingoftheLTEmarketinEurope,withApple’sdecisiontosupportthe1800MHz band with its first LTE-enabled device playing into the hands of someoperatorsandcausingconsiderableconsternation forothers.Thedevicewilllikelybecome theworld’sbest-sellingsmartphone in itsfirst fullquarterafterlaunch,anduserswillbekeentotakeadvantageofitsLTEcapabilities.However,withonly13of36liveLTEnetworksinEuropeoperatinginthe1800MHzband,onlyaroundone in threeLTEoperatorsacross the regionwillhavea4GLTEnetworkthatiscompatible.
Thisputspressureonoperatorswith800MHzand2.6GHzLTEservices,themostcommonLTEbandsinEurope,whichcouldnowlosecustomerstorivalsabletoofferiPhone4Gpackagesasanexclusive.Theoperatorssettogainthemostadvantagearethosewhicharethesole1800MHzLTEoperator intheircountry,alistwhichcurrentlyincludesDeutscheTelekominGermany,O2intheCzechRepublicandT-MobileinHungary.Meanwhile,Finland,Poland,CroatiaandDenmarkallhavetwoLTEoperatorsinthe1800MHzband,whichcouldmeanparticularlybadnewsfortheirrivals.Ontheflipside,manycountriesintheregionhaveno1800MHzLTEnetworksatall,soiPhone5userswillhavenochancewhatsoeverofa4GLTEservice–althoughweexpectmore1800MHzlaunchessoon.
This issue has been felt particularly acutely in the UK, where in August theregulatorOfComgrantedpermissiontolargestoperatorEverythingEverywheretolaunchthecountry’sfirstLTEnetworkonitsspare1800MHzspectrumlaterthisyear.ThisdecisionwasmetwithconsiderableprotestfromlocalrivalsO2andVodafone,whichmustwaituntilthenextroundofUKspectrumauctionsarecompletedin2013beforetheycanlaunchLTEservices–andeventhenthespectrumwillbeinthe800MHzand2.6GHzandthusnotcompatiblewiththeiPhone5.WhilstotherLTEsmartphoneswillbeavailableforthesebands,theseoperatorswillonlybeabletosupplyApple’sdeviceontheir3GHSPAnetworks,afactthatEverythingEverywhere–and3,whichalsohas1800MHzspectrumsubjecttoclearance-willbewellplacedtoexploit.
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wirelessintelligence.com
86+87+90+92+95+97+99+100Northern America
Q2 2011 Q1 2012 Q2 2012
Connections(million)
Total 352.2 370.3 372.8
Contract 281.2 291.5 292.4
Prepaid 71.0 78.8 80.5
CDMA(Family) 187.4 190.8 189.8
GSM 58.2 43.1 40.9
WCDMA(Family) 88.4 109.0 111.7
Netadditions(million)
Total 6.4 4.4 2.5
Contract 4.4 2.4 0.9
Prepaid 2.0 2.0 1.7
Growthrate,quarterly
Total 1.9% 1.2% 0.7%
Contract 1.6% 0.8% 0.3%
Prepaid 3.0% 2.6% 2.1%
Growthrate,annual
Total 8.9% 7.1% 5.9%
Contract 9.8% 5.3% 4.0%
Prepaid 5.4% 14.3% 13.4%
Marketpenetration 101.3% 105.9% 106.3%
ARPU $48.94 $48.56 $48.94
63+68+73+78+81+83+85+87500
400
300
2009 2010 2011 2012 2013 2014 2015 2016
200
100
0
Con
nect
ions
(mill
ion)
Market penetration
120%
100%
80%
60%
40%
20%
0%
Technology split
CDMA (Family) GSM WCDMA (Family) LTE (Family) Other
51+12+30+6+1+c39+8+27+26+0+c2012 2016
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wirelessintelligence.comNorthern America4G LTE adoption is reshaping the US spectrum landscape
Tier 1 operators continue to switch on wider LTE coverage• InQ22012,LTEconnectionsintheUStotalled13.7million,ofwhich
VerizonWirelessholdsthemajorityshare(79%)• 4GLTErepresented4%oftheUSmarketinQ22012andisforecastto
reach6%byyear-end-over20millionLTEconnections• AT&TMobility’sLTEnetworkislivein66marketsandexpectsitsLTE
deploymenttobelargelycompletebyendofnextyear• VerizonWireless’LTEnetworkislivein371markets–covering75%ofthe
USpopulation–andtheoperatoristargeting400marketsbyyear-end• SprintNextelannouncedthatitsLTEnetworkrolloutisunderwayinmore
than100additionalcitieswithinitsexistingnationwide3Gfootprint;bytheendof2013,theoperatorexpectsitsLTEcoveragetolargelymatchitsexistingnationwide3Gfootprint
• T-MobileUSA’splantorolloutLTEin2013looksmorelikelynowthattheFCCandDoThaveapproveditsAWSspectrumpurchasefromVerizon
LTE adoption is accelerating technology migration• AT&Tplanstoshutdownitslegacy2Gnetworkin2017asitrefarms
spectruminthe1900MHzbandfornext-generationservices• SprintNextelintendstoshutdownitsiDENnetworkinQ22013,ceasing
itsfocusonWiMAXatthesametimeandrefarmingits800MHzspectrumforCDMAandLTEservices
• T-MobileUSAaimstorolloutLTEintheAWSspectrumitacquiredfromAT&TandVerizonwhilerefarmingits1900MHzspectrumforHSPA
• MetroPCShopestobeginrefarmingspectrumthatitiscurrentlyusingforCDMAtrafficbythemiddleofnextyear,andisworkingtomoveallitstraffictoitsLTEnetwork
• VerizonWirelessstatedthatitwillmaintainits3GCDMAnetworkfor“avery,verylongtime”inordertosupportnicheproducts,includingmachine-to-machineapplications
Insight: Tier 2 operators ramp-up 4G while supporting LTE roaming solution
Aspartofits‘4GLTEforAll’marketingcampaign,MetroPCSpassedanumberofmilestonesduringthesecondhalfof2012.TheUSoperatorreached700,000LTEconnectionsinQ22012andlaunchedanunlimitedLTEdataplanfor$55permonthinAugust.Thispromotion–albeitbeinglimitedintime–isanefforttoalignitspricingwithlargerrivalssuchasVerizonandcomesalongsidetheintroductionofmoreaffordableLTEsmartphonessuchas theLGMotion4Gpriced at $149. In addition,MetroPCS has commercially deployed its VoLTEnetworkwhichitoffersviatheLGConnect4Guntilmorecompatibledevicesareaddedtotheportfoliobyyear-end.
AsofQ22012,MetroPCShasbuilt-outaround90%of itstotalfootprintwith4G-LTE–up from80% inQ12012 -andexpects to reach97% inOctober.Meanwhile,CricketCommunicationsexpectsitsLTEnetworktocover21millionpeople by year end, aiming to reach two thirds of its total network footprintover thenext twoto threeyears.Similarly,CSpireWireless launched itsLTEnetworkinSeptembercoveringaninitialpopulationof1.2millionpeople.TheMississippitownsofMcComb,Brookhaven,MeridianandGreenvillearethefirstof31marketsthatwillreceiveCSpire’sLTEservicesbetweenSeptemberandtheendofOctober.Anothersixmarketswillbeactivatedbytheendof2012whilefurtherlaunchesareplannedfornextyear.
SpectrumremainsamajorconcernforTier2operators.MetroPCShasdeployedLTE in its1700/2100MHzband (AWS)and its1900MHzband,stressingtheopportunityforroamingagreementswithotheroperatorsinthisAWSspectrumcombination.ThesetypesofLTEdataroamingagreementsstartedmaterialisinginlateAugustoncetheFCCapprovedVerizonWireless’$3.9billionpurchaseof20MHzofnationwideAWSspectrumfromseveralcablefirms,alongwithrelated spectrum deals with T-Mobile USA andCricket Communication. TheAWS spectrum now appears a good candidate for regional and global LTEroaming,withmostUS LTE operators supporting this solutionwhile chasingadditionalspectrumassets.
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Joss Gillet Senior Analyst
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Jon GrovesAnalyst
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