Informa
Telecoms & Media reports that during 2007 and into 2008, the market
for prepaid mobile services has continued to grow more than twice as
fast as the contract market. At the end of 2007, there were 2.33
billion prepaid subscriptions in the world, of which nearly 2% were
accounted for by prepaid WCDMA accesses. Prepaid services generated
US$241.9 billion in revenues for mobile network operators in 2007. By
far the largest prepaid market was Asia Pacific, with 43% of global
subscriptions and almost 30% of revenues.
The number of people
owning multiple SIMs continues to rise, and at the end of 2008 about
28.9% of reported subscriptions worldwide will be accounted for by
secondary or tertiary SIM card ownership. Operators may be forced to
consider whether issuing SIM cards is a sustainable way of increasing
the lifetime value and profitability of individual customers, suggests Informa Telecoms.
Ultimately,
understanding prepaid customers' individual value expectations rather
than how many SIM cards are in circulation may be a more reliable route
to long-term improvements in ARPU and profitability, notes Informa Telecoms.
Informa
Telecoms & Media predicts that by 2013 there will be 3.93 billion
prepaid subscriptions, generating revenues of US$382.2 billion.
Although prepaid subscription growth will slow down to a global CAGR of
just over 9% from 2007-2013, the prepaid market will still account for
over 80% of new mobile subscriptions over the period and will continue
to outperform contract growth.
Future growth will come from
new customers, primarily very-low-income customers in developing
markets; existing prepaid customers, prepared to increase their
spending on value-added services; and contract customers, using prepaid
bolt-ons for services such as "mobile broadband" applications and
receptive to hybrid tariff plans as a means of increasing their control
over their spending on mobile services.
In developed markets,
operators will increasingly seek to maximize the value of their prepaid
customer base. The dividing-line between contract and prepaid is
blurring, as contracts become shorter, SIM-only deals proliferate, and
prepayment mechanisms for contract add-ons become the norm. To maximise
the value of prepay, operators need to become much better at enabling
customers to tailor their services to their needs.
In developing
regions, there is extensive innovation in terms of designing tailored
packages for prepaid customers and as a result prepaid customers are
often able to access more advanced services than in developed markets.
However, operators will need to balance the need to acquire share of very
low-spending customers to increase their prepaid base, versus the need
to develop increased value from existing prepaid customers in the
long-term. Differentiation will shift from price to value, and the role
of new services that maximize the potential of the mobile handset will
be key to growth.
New prepaid mobile applications are a
potential diversification route available to all operators, and one
that is particularly attractive to operators in emerging markets. By
diversifying their revenue streams into related mobile-based
applications and maximizing the use of their mobile customer base and
billing/recharge relationship, operators can potentially increase the
usage of their networks and improve their return on investment, even in
a very-low-ARPU context.
Informa Telecom's in depth report.