frost & sulivan - gsm market share july 2009.pdf

7/29/2019 Frost & Sulivan - GSM market share July 2009.pdf

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Frost & Sullivan

July 2009

2009 Frost & Sullivan. All rights reserved. This document contains highly confidential information

and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or

otherwise reproduced without the prior written approval and consent of Frost & Sullivan.


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A G l o b a l G r o w t h C o n s u l t i n g C o m p a n y

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A G l o b a l G r o w t h C o n s u l t i n g C o m p a n y

Summary----------------------------------------------------------------------------------------------1

1. Overview of Global GSM Market---------------------------------------------------------3

1.1 Global GSM Market Development-----------------------------------------------------3

1.2 GSM Market Development in Major Regions---------------------------------------4

2. GSM Market Share Analysis in the Past 5 Years---------------------------------------8

2.1 Competitive Analysis of Global GSM Equipment Market-----------------------8

2.2 Market Share Analysis of Top five GSM Equipment Providers----------------10

3. GSM Market Forecasts and Opportunity Analysis---------------------------------14

3.1 GSM Market Forecasts---------------------------------------------------------------------14

3.2 GSM Market Opportunity Analysis-----------------------------------------------------14


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Frost & Sullivan www.frost.com

Copyright 2009 Frost & Sullivan - 1 -

Telefonaktiebolaget LM Ericsson (Ericsson), one of the early propellants in GSM

market, reached 31.0 percent of global newly added GSM market share. Huawei

Technologies Co., Ltd. (Huawei) accounted for 27.0 percent of the GSM market in

the same year and shows the potential to occupy a better position in future. As

one of the top four GSM equipment providers, ZTE Corporation (ZTE) grew rapidly

during the past five years. In 2008, its share in the global newly added market

attained 15 percent, which justifies its dominance in the market. Chart 1 shows the

market share analysis for the global GSM market in 2008.

Chart 1 GSM Newly Added Market: Market Share Analysis, 2008

Source: Frost & Sullivan

As seen in Chart 2, Ericsson and Huawei show strong competitive strength, ZTE

enters the 1st Group of global GSM equipment providers along with Nokia Siemens

Networks (NSN). Alcatel-Lucent (ALU) is losing its market share gradually and has

been positioned in Group 2.


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Chart 2 Global GSM Market: Positioning of Top Five Providers



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With regard to the mobile subscriber base, global GSM accounts for 83.5 percent

of global mobile subscribers and this preponderant proportion has retained for a

long time. The scale economies effect of GSM could not be changed till 2014.

With the rich application of 3G, the share of GSM subscribers is likely to decrease

to 56.4 percent by the end of 2013.

Traditional GSM equipment providers, such as Ericsson, NSN and ALU, dominate

mature market. Asia Pacific and Europe are the largest markets for GSM, both in

terms of equipment and subscribers.

From the technological perspective, global GSM networks operate in a number of

different frequency ranges (classified as GSM frequency ranges for 2G and UMTS

frequency bands for 3G). Most 2G GSM networks operate in the 900 MHz or 1,800

MHz bands. North American countries (including Canada and the United States)

use the 850 MHz and 1,900 MHz bands, because the 900 MHz and 1,800 MHz

frequency bands were already allocated. Most 3G GSM networks in Europe

operate in the 2,100 MHz frequency band.

As seen in Chart 3, the mobile subscriber base in China and India reached 25.0

percent of global mobile subscriber base in 2008, which is a significantly high

proportion. Chinese mainland has 650 million mobile subscribers, and accounts for

16.0 percent of global subscriber base. Indian mobile subscriber base reached

392 million, an increase of 56.4 million in Q1 2009. It is forecast that mobile

subscriber base in India will reach 493 million by the end of 2009, and further grow

to 683 million by 2010.


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Chart 3 GSM Market: Percent of Mobile Subscriber Base (World), Apr. 20091


GSM was firstly developed in Europe, where enjoys the richest applications of GSM.

It should be noted that mobile carriers perform very differently in the licensed

markets of Western Europe, despite similar framework conditions on both the

supply and demand sides. For example, as seen in Chart 4, top five UK GSM

carriers are 3 UK, Orange, T-Mobile, Telefonica O2, and Vodafone.

Chart 4 UK GSM Carriers Subscribers Base (Millions, 1Q2008)


The United Kingdom had about 73.1 million mobile subscribers at the end of 2007,

1 Others mainly include Europe, North America, Africa, etc.


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which represented 9.0 percent of the European mobile subscriber market. GSM

subscriber base in the United Kingdom is still increasing, and the number of total

subscribers is likely to increase from our projected 75.9 million in 2008 to 78.0 million

in 2010, with wireless penetration expected to reach 126.0 percent in 2010.

By the end of 2008, China had 641 million mobile subscribers and 47.3 percent of

mobile penetration rate. With a population of 1.33 billion, Chinas mobile market

looks promising for the next three years. At the beginning of 2009, 3G licenses were

issued to three main carriers in China.

In 2008, China Mobile, who is the largest GSM mobile carrier in the world,

increased 700,000 TRXs to meet the needs of 457.3 million subscribers. As seen in

Chart 5, China Mobile achieved USD 60.3 billion of revenue and USD 16.5 billion of

net profit by the end of 2008.

Chart 5 China Mobile device market shares by Revenue (RMB Billion)


Liberalization of the Indian telecom sector began in 1991. India currently has the

second largest telecommnication network in the world after China. As of March

31, 2008, there were more than 300 million telephone connections in the country,


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of which 261 million were mobile connections. Approximately 8 million mobile

connections are being added every month. Telephone connections are to be

expected to touch the 500 million mark by the 2010.

This growth, however, has been concentrated mainly in urban areas, while rural

tele-density remains low at less than 7 percent. Despite a steady fall in the ARPU

with ever declining tariffs (Indian telecommunication tariffs are the lowest in the

world), Indian telecommunications companies have been expanding their

network and increasing their coverage of areas in rural India. The Government of

India, through the Department of Telecommunications (DoT), has also sought to

assist the process of enhancement of rural penetration by extending its scheme of

offering subsidies on rural lines up to March 2009, and by allocating funds from the

USO Fund for construction of shared passive infrastructure in rural areas.

India is one of the most important GSM markets at present, and nearly all of the

top GSM equipment providers are focusing on this emerging market. GSM mobile

carriers in India added 9.32 million new subscribers in June 2009, which is a good

improvement over the 8.93 million subscribers added in April 2009. From Figure 1,

Indian in June 2009 total GSM subscriber base reported by carriers was at 315.78

million, as against 306.45 in the previous month.

Figure 1 Indian GSM Subscribers of Key Carriers, Jun. 2009

Bharti Airtel

Vodafone

BSNL

IDEA Cellular

Aircel

Reliance GSM

MTNL



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1) Bharti Airtel reached the 100 MILLION CUSTOMERS mark the first to do so in India,

with a total base of 102,367,881 customers. This was made possible with the gain of

28.18 customers during Jun. 2009.

2) Vodafone did not do too badly either the company added 2.37 million

customer to take its base up to 76.44 million.

3) BSNL held the 3rd position with a base of 49.07 million, by adding 896,000

customers in till June 2009.

With respect to data service, certain mobile entertainment services, such as

mobile music, mobile games, and mobile TVs, are seeing increasing demand. In

effect, mobile music is extremely popular in India. Mobile music is likely to account

for more than 90.0 percent in Indias music share in 2009.


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As seen in Chart 6, global GSM shipments increased from 2600 k TRXs to 3438 k TRXs

with 5.5 percent yearly growth rate. Although the GSM shipments in 2006 and 2008

were less than the previous year, the overall GSM market was climbing in the last 5

years. It is to be respected that the GSM shipments will continue to rise in next 4 - 5

years.

Chart 6 Global GSM Market Share by Shipments (k TRX)


Ericsson, NSN, Huawei, ZTE and ALU are the major participants in the mature global

GSM market. Traditional GSM equipment providers, such as Ericsson and NSN,

often compete in more mature markets for better profitability. Emerging GSM

equipment providers, such as ZTE and its bigger rival Huawei are growing over the

years, as their R&D and manufacturing activities are centered in the developing

countries and they undertake flexible localized operation.

In mature market, GSM carriers have been providing 3G service for several years.

The market is characterized by fierce competition and increased demand for

data services from subscribers. Apart from looking for new customers, retaining

existing GSM customers for carriers in mature market is also important. In Western

Europe, as a mature market, and GSM carriers are looking at value-added

services through better groups of killer applications. Mature market is considered


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as saturated market, especially in Western Europe, GSM carriers are constantly

looking for new ways to differentiate themselves from their competitors.

GSM market continues to promote mobile subscriptions growth in newly added

GSM markets, with market share rising by the end 2007 in Brazil to 76.5 percent

(63.1 percent in end-2006), in China 91.9 percent (91.5 percent), in India 78.9

percent (76.7 percent) and in Russia 99.3 percent (99.1 percent).

As seen in Chart 7, the newly added GSM markets experienced significant

changes, while emerging providers, such as Huawei and ZTE, increased their

market shares by the end of 2008, and traditional providers, such as Ericsson, NSN,

Alcatel-Lucent did not register much growth in market share.

Chart 7 GSM Newly Added Market: Market Share Analysis, 2008


Ericsson was the leader of GSM market with 31.0 percent market share in 2008,

and its strong position in mature market contributed about 70.0 percent of its total

revenues. NSNs market share declined to 16.0 percent in 2008.

Huawei accounted for 27.0 percent of newly added market in 2008 and has the

potential to increase its share in future. ZTE had grown rapidly during the past five

years. In 2008, its share in newly added market attained 15 percent, which justifies

its being considered as one of the top four GSM equipment providers.

Under current market scenario, emerging providers such as ZTE and HUAWEI


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display great competitive strength, as their R&D and manufacturing activities are

centered in the developing countries and they undertake flexible localized

operation. Thus, they are poised to get much more shares in the newly added

markets and are likely to enter the high-end market soon.

For example, ZTE shows about 120.0 percent growth rate per year and increased

480,000 TRXs from 2005 to 2008. In 2007, ZTE was included in the top four GSM

equipment providers in the world, partnering with industry-leading carriers

including China Mobile, China Unicom, Reliance, Etisalat, Telenor, and Hutchison.

In 2008, ZTE increased 100.0 percent of GSM product shipments over 2007 and

generated 15.8 percent of newly added global market share.

Chart 8 ZTE Global GSM Shipment (k TRX)


As seen in Chart 9, Ericsson market share has declined to 29.2 percent of the total

GSM market share. According to the following trends, it is obvious that Ericsson,

the early propellant of GSM market, is gradually losing its market share. Ericsson

meets Huawei and ZTEs cogent challenges.


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Chart 9 Ericsson GSM Market Share by Shipments (2004-2008)


As seen in Chart 10, Huawei market share by shipments increased quickly from

2004 to 2008. Huawei accounted for 23.8 percent of GSM shipments in 2008, and is

expected to increase its market share over the years and come closer to Ericsson

in terms of market position. However, it is unlikely to displace Ericsson as the leader

in near future.

Chart 10 Huawei GSM Market Share by Shipments (2004-2008)


As seen in Chart 11, NSN declined markedly from 35.7 percent in 2004 to 18.0

percent in 2008. NSN is losing its shares in the emerging markets, because NSN find

it difficult to reduce R&D, manufacturing and operation costs.


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Chart 11 NSN GSM Market Share by Shipments (2004-2008)


As seen in Chart 12, ZTE experienced a dramatic progress in GSM market with a

high growth rate. As one of the top four GSM equipment providers since 2007, ZTE

owns the great potential to grow further driven by its SDR (Software Define

Radio)-based base station series, cost-effective solution, and after-sales services.

Chart 12 ZTE GSM Market Share by Shipments (2004-2008)


As seen in Chart 13, ALU kept a stable share between 6.0 percent and 8.0 percent.

Compared to the market share in 2000, ALU has lost about 30.0 percent of its

share.


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Chart 13 ALU GSM Market Share by Shipments (2004-2008)


From Chart 14, global GSM equipment providers share changed a lot. The

emerging providers, such as Huawei and ZTE, occupied more shares, the

traditional providers, such as Ericsson, NSN and ALU, lost their shares synchronously.

In future, how to occupy more shares of developing countries becomes the key

factor.

Chart 14 Top five GSM Equipment Providers Market Share by Shipments



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1) On the basis of a large number of global subscribers, global GSM market will

have 500 million subscribers till 2010.

2) In mature market, GSM carriers have been providing 3G service for several

years, and this market is likely to grow slowly.

3) Most of competitions will experience emerging market, such as China, India

and African countries.

4) With regard to Asia Pacific, mobile subscriber base is likely to increase at a

stable rate by 2013; as a result, there will be stable demand for GSM device by

2012.

5) In Latin America, mobile subscribers are expected to reduce further in number

as the market shifted from CDMA to GSM.

6) The GSM device price is likely to drop continually and professional maintenance

services are expected to gradually gain importance. In particular, GSM carriers

will emphasize on complete design ability and provision of customized

maintenance services, especially for data business operations.

In future, key GSM market opportunities will focus on two aspects. First of all, the

undeveloped market in newly market will be the future market emphasis. Second,

the mainstreaming GSM carriers, especially the EDGE and LTE revolution will

provide increased opportunities.

With respect to GSM market opportunities, following is likely to come true in next

four to five years:

1) Compared to the transition from GSM to LTE, the transition from GSM to EDGE

would be smoother and cost less, as most of the mobile subscribers are using GSM

and a majority of them do not want to change their phone numbers or phones

immediately.


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2) In the high-end market of developed countries, ZTE and HUAWEI are taking

advantages of low-cost and customized applications to seek market

opportunities and demonstrate their competitive strength.

3) In the low-end market of the developing countries, the emerging providers,

HUAWEI and ZTE have many advantages, including localized operation,

customized invention and relatively low TCO. They are likely to seek more market

opportunities and demonstrate their competitive strength.

4) Emerging markets, such as China, India, and African countries, are likely to

witness an incremental trend of capacity expansion of GSM and EDGE

application.

5) Value-added services will attract more subscribers attention; primary GSM

carriers are accumulating more technologies and capitals to strengthen their

profitability.

6) As one of the few telecommunications equipment and network solution

providers in the industry at present with base stations that support GSM/UMTS

dual-mode operations, ZTE shows highly competitive competition strength and is

likely to be considered among top three providers of global GSM market by the

end of 2009.

frost & sulivan - gsm market share july 2009.pdf

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