Telecom firms 'will have to offer smart services to maintain revenue'

This year, smartphone user penetration in Thailand is about 30 per cent and migration to these devices will continue to be the key revenue driver in market next year, Marc Einstein, industry principal for ICT (information and communications technology) practice at Frost & Sullivan, said yesterday.
“How to get many more people to use smartphones and tablets as well as how to monetise the use of smartphones and tablets is the big challenge for Thailand,” he told a media briefing on “2014 Global and Thai ICT Market Trends”. Frost & Sullivan is a global growth consulting firm.
The gap between prepaid average revenue per user and post-paid ARPU continues to narrow, creating a huge issue concerning device subsidisation, he said. Thai mobile ARPU this year is slightly over Bt400, while post-paid ARPU is higher than that. However, mobile ARPU has been declining at a compound annual growth rate (CAGR) of negative-4.2 per cent. Post-paid ARPU has been dropping more quickly than prepaid, at negative-15.5 per cent versus negaitve-2.3 per cent.
Over-the-top services such as LINE, Facebook and Twitter are not only killing the voice market, but the data market as well, he said.
Also, the total number of minutes that mobile-phone owners use them is decreasing gradually. And the number of minutes for post-paid users has fallen sharply since LINE was introduced in Thailand two years ago.
“Before LINE debuted in Thailand, the number of minutes spent per post-paid user in Thailand [for voice calls] was around 400 [per month]. Now the total number of minutes is slightly over 200,” Einstein said.
In Japan, since June 2011, when LINE was launched there, data ARPU growth has been zero. Therefore, NTT DoCoMo, the largest operator in Japan, had to offer new smart services to generate revenue from new sources. This so-called smart ARPU has posted CAGR of 6.5 per cent since LINE’s launch, while voice ARPU declined by 4.8 per cent in the same period of time, Einstein said.
NTT DoCoMo’s voice ARPU has contracted by 40 per cent in the past two years. The total minutes of smartphone use has also dramatically decreased since LINE existed. Therefore, NTT DoCoMo now reports a “smart ARPU” to counterbalance voice declines.
“Smart ARPU is the new source of revenue that telcos can generate from the new services they offer for smartphone devices. For example, smart services are cloud storage, intelligence service, digital content, life-support service such as education and healthcare, and physical commerce services,” Einstein said.
In Thailand, operators can still enjoy data revenue now that third-generation service is available. Therefore, Thai operators can still generate revenue by getting people to migrate to smartphones and tablets.
Einstein said Thai operators could continue to enjoy this kind of business for about two more years. “Then, when the number of smartphone and tablet users has saturated the market, they will have to follow the global telcos’ solutions and diversity into non-telco business and offer smart services. Smart ARPU will be the core revenue for them in the near future.”
Meanwhile, the number of smartphone users in Thailand is dramatically increasing, while tablet use is also expanding rapidly. This year, the number of tablets users in Thailand is expected to be around 4 million, increasing to 7.5 million next year, and to slightly under 20 million by 2017.
He said tablets were important because their ARPU was four times that of smartphones. “Around 65 per cent of app spending in Thailand comes from tablets.”