A STRATEGY FOR ASEAN
22nd to 23rd August, 2013
Shangri La Hotel
Singapore
Organiser
Co-Organiser
Network ASEAN Forum 2013
CONNECTIVITY
22nd - 23rd August 2013
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
Connectivity context – Highly dynamic ecosystem with
critical role for ASEAN economic development
• ASEAN telecommunications markets dominated by mobile - >2/3 of revenue in most
markets except Singapore
• Continued strong growth rates beyond mobile penetration rates of 100%, with slight declines
in ARPU
• Region characterized by high variance in market structure - by ARPU levels, pre- vs.
postpaid, levels of data usage/smartphone ownership
• Competition tends to be highly concentrated around top 3 players (>80% share), still with
strong role of domestic-only telcos with select regional players
• Ongoing massive shift to data and 3G on the back of rapidly declining smartphone prices;
emerging markets to date showing better monetization on traffic than developed markets
• Fixed connectivity in most markets at low levels of development with <20
connections/inhabitants – however strong push across region on fiber rollouts, with
Singapore and Malaysia as early movers
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
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Agenda
•International roaming
•OTT in ASEAN
•New services - Mobile money/virtual CC; potential
for mobile advertising
•Regulatory maturity in ASEAN – spectrum,
interconnect, local content requirements
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
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Roaming charges in ASEAN countries are significantly
higher than in Europe and vary across Telcos
Range
Data charges
(per MB)
Voice charges
- calls made
(per min)
Voice charges
- calls
received
(per min)
n/a
SMS charges
Note: Charges are for usage within/across ASEAN countries; charges vary based on call or usage destination; charges exclude VAT
Source: Telco websites
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
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Roaming regulations in ASEAN would need to be
strengthened to reduce charges
EUROPE’S REGULATION ON ROAMING IS HOLISTIC &
WELL-ENFORCED…
• Holistic regulatory approach to international data
roaming services
…INITIATIVES ACROSS ASIA NOT COMMONLY
ENFORCED, THUS LESS IMPACTFUL
• Adoption of the Addendum of ATRC*
Intra-ASEAN Mobile Roaming Rates to
reduce roaming charges; countries to
implement when ready
1
• Protect consumer interest
• Good compliance in all member states
ASEAN
• Ofcom, UK communications regulator, helps enforce
roaming regulation
2007
• Roaming I: Cap wholesale & retail charges for voice
calls
2009
• Public consultation on 2007 regulation; results not
satisfactory
APT
- Cut-off mechanism available once bill reaches €50
• Roaming III: Caps retail prices for data roaming
- Customers can sign up for a mobile roaming contract with
foreign operators while traveling
- Malaysia & Singapore
- Malaysia & Brunei
- Singapore & Brunei
• Addresses transparency measures &
bill shock
2
• Roaming II: Cut in SMS and wholesale data
roaming charges
2011
• Bilateral initiatives common
3
APEC
• Aims to remove regulatory barriers
that cause high input costs for roaming
• Issued guidelines on provision of info
to consumers on roaming &
substitute technologies
Note: ATRC: ASEAN Telecommunication Regulators Council; APT: Asia Pacific Telecommunity; APEC: Asia Pacific Economic Cooperation
Source: Ovum “Regulatory Status of International Roaming”
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
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Agenda
•International roaming
•OTT in ASEAN
•New services - Mobile money/virtual CC; potential
for mobile advertising
•Regulatory maturity in ASEAN – spectrum,
interconnect, local content requirements
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
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OTT services in ASEAN markets are growing;
likely a threat to SMS revenue
SMS AS A SOURCE OF REVENUE HAS BEEN
DECLINING…
…LIKELY DUE TO GROWTH IN OTT SERVICES
Many market drivers supporting substitution to OTT
services
• Increasing Smartphone penetration
• Low price compared to regular voice
• Ease of access
- Apps and app marketplaces
- Telcos start to bundle VoIP (in particular smaller Telcos in
fragmented markets)
• Technological development
-
Improved sound quality on 3G networks
Deployment of high capacity all-IP networks (e.g. LTE)
Availability of alternative networks (Wi-Fi)
Features e.g. video conferencing
• Net neutrality regulation undermine attempts to block
VoIP in certain markets
• Increase in consumer demand as users of dedicated
VoIP expect mVoIP
Note: Non-voice revenue include data, messaging & VAS; does not include all Telcos in each countries
Source: Wireless Intelligence; Gartner; Ovum; Informa
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
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ASEAN players are expanding networks, partnering
with OTT players & pushing apps usage
INDONESIA
• Focus on network upgrades,
innovative pricing and product
mix to increase data uptake
• OTT threat mgt. primarily
through partnerships and own
app stores
• Network expansion (3G)
- >50% CAPEX in 2011 allocated for
this
• Launched money remittance
service, tracking &
monitoring system etc.
SINGAPORE
• Expanding its LTE network
• Working with alliance partner
Vodafone Group on an
interoperable RCS* platform
• Expanding VAS offerings like
NFC movie ticketing service, ebookstore, NFC app etc.
• Upgrading its 4G & LTE network
• Launched new VAS offerings
such as several mobile apps,
mobile payment service using
NFC, e-book service etc.
• Network expansion (3G)
- Contracted NSN in 2012
• Expanding mobile data and
VAS offerings like app store,
music, games etc.
MALAYSIA
• Focuses on content bundling to
promote wireless data services
• Offers deals with OTTs such as
Skype & Deezer (music streaming
service)
*Rich Communications Services provide similar rich-featured messaging standards as OTT apps
Source: Analyst reports; Bain analysis
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
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Agenda
•International roaming
•OTT in ASEAN
•New services - Mobile money/virtual CC; potential
for mobile advertising
•Regulatory maturity in ASEAN – spectrum,
interconnect, local content requirements
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
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A significant portion of the ASEAN population is still not
served by the formal financial sector
Unbanked
Banked
Note: Banked population defined as percentage of the population 15 years and older that has a formal relationship with a bank or other financial institution via a current
savings account, checking account, credit card or a combination of these products”
Source: Euromonitor
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
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Rapid growth in mobile usage presents a unique channel to
reach both banked and unbanked segments
EXAMPLE INDONESIA - MOBILE PENETRATION
OVERTOOK BANKING PENETRATION SINCE
’06…
…PRESENTING AN OPPORTUNITY TO TARGET
BOTH BANKED AND UNBANKED SEGMENTS IN
INNOVATIVE WAYS
“
With the Indonesian population at
approximately 250 million people, these new
mobile banking services will help us attract new
customers and expand our market share
significantly
”
- Strategy & Finance Director
CIMB Niaga
“
In contrast [to the banking sector], the
Indonesian telco sector has been extremely
effective in moving down market. … Combining
FS expert with the broad market capabilities of the
mobile telco channel presents a unique
opportunity for gov’t and commercial entities to
develop new business opportunities
- USAID Report
”
Source: USAID, Sybase, Bain analysis
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
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Opportunities in mobile money along three categories of
usage
1
Transactions Services
M-Wallet
• Stored value account
2
Mobile Commerce
Mobile consumer services
- New mobile consumer payment
technology (NFC, QR code, …)
Mobile merchant services
- New mobile merchant payment
technology (mobile POS, P2P on
the spot, …)
Traditional Payments
• Utility bill payments
• Remittances (domestic,
international)
• Cash-in/cash-out
- Via banks, retailers, agents
- Including government cash
payments
Mobile Banking
Mobile Banking
• Banking inquiries
- E.g., account balances, SMS
alerts
• Mobile top-up
• Mobile wallet-to-wallet
transfers (P2P)
3
Mobile shop/portal services
• Mobile/online savings
accounts
• Mobile/online loan
applications and
disbursements
• Insurance
- E.g., online shopping, online
games, media, virtual products
Mobile marketing services
- E.g., customer loyalty, mobile
ads, coupons and offers
Source: Bain analysis
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
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Agenda
•International roaming
•OTT in ASEAN
•New services - Mobile money/virtual CC; potential
for mobile advertising
•Regulatory maturity in ASEAN – spectrum,
interconnect, local content requirements
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
SNG
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Regulatory challenges across ASEAN similar with potential
for learning from other markets – select examples
Spectrum
Interconnect
Local content
• Various approaches
to shaping
competition, from
focusing on few key
players to fostering
new entrants
• General trend to
reduce interconnect
charges across
markets, e.g. recent
efforts in Thailand,
which typically enable
more level playing
field for challengers
• Emerging trend to
push local economic
participation in
technology sectors
related to telecoms,
with efforts particularly
in Indonesia
• Increasing emphasis
on assigning
common spectrum
blocks across ASEAN
to facilitate
connectivity (e.g.
digital dividend blocks
by 2020)
• Few exception like
SMS Interconnect in
Indonesia to reduce
amount of spamming
• Questionable net
benefits as
competition gets
disrupted
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
Fiber rollout
• Only Singapore and
Malaysia with broad
rollout to date
• Key future challenge to
enable broad-based
rollout in other ASEAN
markets, where telco
economics often do
not justify
investments but
significant multiplier
benefits for other
sectors are expected –
various forms of
public/private
partnerships can be
used
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THANK YOU
Organiser
Co-Organiser