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Telecom flourishes in South Asia, Middle East

Posted: 11 Jan 2010     Print Version  Bookmark and Share

Keywords:telecom  South Asia market  broadband 

In recent years recession dealt a blow to economies all over the world and sectors which were growing by leaps and bounds dried up quickly. The most sought after markets to invest in turned to dust. During these trying times, the only sector which has remained unscathed has been telecom.

A recent study done by Frost & Sullivan on Telecom Companies Capital Expenditure for the South Asia and Middle East markets reveals the sector has shown resilience not only in the revenue generated by operators but also in their spending capacity. The sector will see investments in developing markets like India, Sri Lanka, and Bangladesh as well as in mature markets like the UAE and Saudi Arabia.

The study finds that the Indian market with its sheer size will continue to dominate the spending in the region. The total telecom spending in the Indian market was Rs.100916.42 crore ($21,553.1 million) in 2008; this is anticipated to grow at a CAGR of 2.2 per cent till 2015 to reach Rs.117,659.11 crore ($25,128.9 million). The CAPEX will be driven by 3G operations that are expected to start in the next one to two years and the thrust on broadband and carrier services by incumbent larger operators.

Girish Trivedi, deputy director, South Asia and Middle East, Frost & Sullivan states "While fixed line services will have lesser investment, mobile services are anticipated to constitute major CAPEX in the South Asia and Middle East region. Technological advancements like 3G will continue to spur the spending pattern. Investments in broadband and carrier networks and multimedia and value-added services will gain significant traction in these regions."

The high competition amongst the Sri Lankan telecom companies market for a relatively small population of 2 crore (20 million) has impacted investments in the country. The spending was led by two big operators while other operators struggle to survive. Frost & Sullivan estimates that the total telecom spending in the Sri Lankan market was around Rs.2759.70 crore ($589.4 million) in 2008; this is expected to grow at a CAGR of around 0.08 per cent between 2008 and 2015 to reachRs.2775.06 crore ($592.68 million). The end of the civil war has opened up the northern and eastern parts of the country thereby driving the country's CAPEX levels.

The Bangladesh telecom market is plagued with taxation issues and the introduction of SIM tax has adversely affected growth in the sector. Most of the operators are partly owned by global telecom firms and hence spending capacity will be impacted in the next one to two years due to the current economic situation. In line with current trends, Frost & Sullivan estimates that the total telecom spending in the Bangladesh market was Rs.8170.01 crore ($1,744.9 million) in 2008; is expected to grow at a CAGR of around 2.4 per cent between 2008 and 2015 to reach Rs.9645.85 crore ($2,060.1 million). The growth in spending will be led by the foray into the untapped rural market.

The telecom network in the UAE is one of the most technologically advanced in the world with 3.5G (HSDPA) and 3.75G (HSUPA) networks being deployed. The introduction of a second operator in the UAE has led to some rationalisation in tariff levels and also increased spending levels in the market. The country has one of the highest GDP per capita in the world and hence despite penetration levels being around 160 per cent, ARPU of the operators will continue to be high. The total telecom spending in the UAE market was estimated by Frost & Sullivan at Rs.5917.39 crore ($1,263.8 million) in 2008; is expected to decline with a negative CAGR of around 0.02 per cent between 2008 and 2015 to reach Rs.5908.50 crore ($1,261.9 million).

Saudi Arabia is the largest country in the Middle East and also has the highest spending levels. The entry of new operators has spurred spending in the market. According to Frost & Sullivan, the total telecom spending in the Saudi market was Rs.30,792.64 crore ($6,576.5 million) in 2008 and is expected to decline with a negative CAGR of around 1.59 per cent between 2008 and 2015 to Rs.27508.53 crore ($5,875.1 million). Broadband penetration is one of the lowest in the region; this segment will constitute a major portion of CAPEX of the operators in the next three to four years.

For more statistics and forecasts, click here.





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