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Mobile Phone Adoption in Developing Countries |
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| Many developing countries have seen rapid and China is expected to post double digit growth rates through 2007. This growth has had significant ramifications for populations of these countries. Although the economic largese is by no means equally distributed, both China and India, two of the largest and fastest cell phone markets have seen a significant increase in their [[Rise of the Middle Class|middle classes]]. This in turn has led to greater demand for cell phones. | Many developing countries have seen rapid and China is expected to post double digit growth rates through 2007. This growth has had significant ramifications for populations of these countries. Although the economic largese is by no means equally distributed, both China and India, two of the largest and fastest cell phone markets have seen a significant increase in their [[Rise of the Middle Class|middle classes]]. This in turn has led to greater demand for cell phones. | ||
| - | ===Maturation of cell phone markets in developing countries=== | + | A sochol could ban shirts of all religious content including anti-religious shirts. It would have to ban both though. And it could not discriminate against one specific religon's shirts. |
| - | With over 200 million subscribers, the United States is estimated to have penetration rates in excess of 75%. Several countries in Western Europe have already exceeded 100% penetration, due to single owners of multiple cell phones. As stated above, growth in these markets will largely depend on carriers' ability to sell their customers up (e.g. more expensive services and more advanced phones) rather than new subscriber growth. Carriers wishing to find new sources of growth have begun to reconsider developing countries. In the past most wireless carriers chose not do business in these countries due to the inherently low margins. The average revenue per user (ARPU) was $50 in developed countries versus $3-$7 in developing countries. It is difficult to sell a service plan for 39.99 ($50+ with taxes) to a consumer that only makes $100 per month. Markets in developing countries have continued to grow at double digit rates -some as high as 100% per year- and have penetration rates ranging from low double digits to 50%. Given these dynamics, several major carriers have decided to move into developing countries in a major way. | + | |
| ===Wireless as the primary communications infrastructure=== | ===Wireless as the primary communications infrastructure=== | ||
Revision as of 06:32, February 19, 2012
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This article describes a concept which could impact a variety of companies, countries or industries. To see what companies and articles reference this concept page, click here. |
International Mobile phone adoption is a source of tremendous growth in wireless industry. Penetration rates for the U.S. cell phone market are greater than 75%, and in Western Europe, Japan and Hong Kong penetration has already exceeded 100 %(multiple cell phones per subscriber). Although there is still significant growth to be found in these markets, much of this growth will take the form of selling increasingly sophisticated services (e.g. video, GPS) to existing customers rather than growing the overall number of subscribers. Meanwhile developing countries/regions such as Brazil, India, China, Africa and Latin America have demonstrated blistering cell phone growth in recent years. As a result providing service and head set to developing countries has become a substantial source of profits for several major carriers and headset producers. Companies that manufacture chips for headsets also stand to benefit from this trend.
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Drivers of International Cell Phone Adoption
Economic Development in Developing Countries
Many developing countries have seen rapid and China is expected to post double digit growth rates through 2007. This growth has had significant ramifications for populations of these countries. Although the economic largese is by no means equally distributed, both China and India, two of the largest and fastest cell phone markets have seen a significant increase in their middle classes. This in turn has led to greater demand for cell phones.
A sochol could ban shirts of all religious content including anti-religious shirts. It would have to ban both though. And it could not discriminate against one specific religon's shirts.
Wireless as the primary communications infrastructure
Although building a cell phone infrastructure for a given country is by no means inexpensive, it is relatively less costly to build cell towers than roll out land line connections to every home. It is not surprising that most developing countries have focused their efforts on building wireless infrastructure as a primary means of communication. In Africa for instance, cell phone penetration rates are approximately 21% versus 9% for land lines. Government's in Africa and elsewhere made the construction of adequate cell phone infrastructure a priority. In several cases they have performed partnerships with major carriers to facilitate the development of this infrastructure. While factors obstacles such as high taxes, in adequate availability of power and lack of geo-political stability may hinder growth some countries, there are numerous developing countries in which the environment is ripe for further cell phone infrastructure development.
Low Cost of Labor
While the average American makes over 40,000 per year, the average Chinese citizen is closer to $1,200. This lower cost of labor can significantly reduce the cost of providing service in developing countries. Headset manufacturers have adapted their offerings to include low end phones under $100. Wireless providers offer numerous pre-paid options in order to appeal to a more cost conscious clientele. This is especially important given that the purchase of the cell phone for can be seen as quite significant purchase by subscribers in developing countries.
Companies that benefit from Mobile Phone Adoption in Developing Countries
Vodafone is the second largest cell service provider in the world. In addition to being the dominant player in Europe, the company has made significant investments in both African and India and stands to benefit from increasing mobile phone adoption in both regions. China Mobile (Hong Kong) (CHL), and America Movil, S.A.B. de C.V. (AMOV) also stand to benefit as subscriber numbers continue to grow in their respective regions.
Nokia and Sony-Ericsson manufacture headsets for major international carriers. Recently the companies signed agreements to supply over $3B in headsets in China. These two companies benefit from Mobile Phone Adoption in Developing Countries.
Texas Instruments is a leading provider of chips for headsets. As subscriber growth increases in developing countries, demand for phones and thus chips increases. Other companies that benefit from subscriber growth in developing countries are Infineon and Qualcomm.
Domestic cell phone tower companies like American Tower (AMT) and Crown Castle International (CCI), who are looking to expand their wireless infrastructure to more rapidly growing cell phone markets. Also, competitor SBA Communications (SBAC) may eventually benefit, but they currently have no international exposure.
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