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Changing the Rules: Old Game, New Players? Old Technology, New Services?

Sandra Ng Vice President, Communications Research - IDC Asia/Pacific sng@idc.com. Davina Yeo Senior Research Manager, Communications Research - IDC Asia/Pacific dyeo@idc.com. Changing the Rules: Old Game, New Players? Old Technology, New Services?.

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Changing the Rules: Old Game, New Players? Old Technology, New Services?

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  1. Sandra Ng Vice President,Communications Research - IDC Asia/Pacific sng@idc.com Davina Yeo Senior Research Manager, Communications Research - IDC Asia/Pacific dyeo@idc.com Changing the Rules: Old Game, New Players? Old Technology, New Services? The Asia/Pacific Telecom Services Marketplace Singapore, 10 December, 2002

  2. Key Notes • Asia/Pacific includes 10 countries namely, Australia, India, Malaysia, Philippines, Singapore, Thailand, Korea, Hong Kong, Taiwan and PRC • Telecom Services refer to Services only, Equipment/Infrastructure Spending is excluded • Revenue of telecom services is equivalent to User Spending (consumers and corporates) • Subscribers refer to Paying Customers only

  3. Agenda • Global Comparison • Fixed & Wireless Telecom Services • Fixed: Voice, Core Data & Access Data • Wireless: Voice, Messaging & Other Data • Competitive Landscape • Summary

  4. Global Comparison Revenue (US$M) 400,000 60% 350,000 50% 300,000 40% APeJ/APiJ APeJ/WW 250,000 30% US Europe APiJ 200,000 20% APeJ 150,000 10% 100,000 0% 2001 2002 2003 2004 Source : IDC, 2002 (prelim)

  5. Fixed Telecom Services Spending 2002 Revenue (US$M) Philippines Singapore Thailand Malaysia Hong Kong Taiwan Korea India Australia PRC 0 5,000 10,000 15,000 20,000 25,000 30,000 Source : IDC Asia/Pacific, December 2002 (prelim)

  6. Wireless Services Spending Q1-Q32002 Revenue (US$M) India Philippines Singapore Thailand Hong Kong Malaysia Australia Taiwan Korea PRC 0 5,000 10,000 15,000 20,000 Source : IDC Asia/Pacific, December 2002 (prelim)

  7. Country Rankings Fixed Wireless 1 PRC PRC 2 Australia Korea 3 India Taiwan 4 Korea Australia 5 Taiwan Malaysia 6 Hong Kong Hong Kong 7 Malaysia Thailand 8 Thailand Singapore 9 Singapore Philippines 10 Philippines India Source : IDC Asia/Pacific, December 2002 (prelim)

  8. Fixed or Wireless? Asia/Pacific (ex Japan) Revenue Shares 160,000 100% 90% 140,000 80% Fixed 120,000 70% 100,000 60% Wireless 50% 80,000 40% 60,000 Telecom 30% Services 40,000 20% 20,000 10% 0 0% 2001 2002 2003 2004 Source : IDC Asia/Pacific, December 2002 (prelim)

  9. Voice remains the Dominant Force Asia/Pacific (ex Japan) Revenue Shares 100% 90% Broadband 80% Dialup 70% Other MDNS 60% IP-VPN and VAS 50% ATM 40% Frame Relay 30% Leased Circuit 20% PSTN and VoIP 10% 0% 2001 2002 2003 2004 Source : IDC Asia/Pacific, December 2002 (prelim)

  10. Core Data Services Opportunity Asia/Pacific (ex Japan) Revenue (US$M) 100% 120 90% IP-VPN and 100 80% VAS ATM 70% 80 Frame 60% Relay Leased 50% 60 Circuit Other MDNS 40% 40 Core Data 30% 20% 20 10% 0% 0 2001 2002 2003 2004 Source : IDC Asia/Pacific, December 2002 (prelim)

  11. WAN Priority 70% 60% 50% 40% No.of respondents 30% 20% 10% 0% PRC India Korea Taiwan Malaysia Australia Thailand Singapore Hong Kong Reduce WAN costs Increase WAN capacity Improve WAN security Implement IP-based facilities Source : IDC Asia/Pacific, Enterprise User Survey (1H2002)

  12. Why IP-VPN? 4 • Cost savings • Secure & effective branch-to-branch connectivity • Secure & effective remote access Likely to deploy IP-VPN (mean) 3.5 3 2.5 2 1.5 1 0.5 0 PRC India Korea Taiwan Thailand Australia Malaysia Singapore Hong Kong Likely to deploy various data services (mean) 2.5 2 1.5 1 0.5 0 Leased Line Frame Relay ATM Metro IP-VPN Ethernet Source: IDC Asia/Pacific, Enterprise User Survey (1H2002)

  13. Access Data Services Opportunity Asia/Pacific (ex Japan) Revenue (US$M) 16,000 100% 90% 14,000 80% 12,000 70% 10,000 Dialup 60% 8,000 50% Broadband 40% 6,000 Access Data 30% 4,000 20% 2,000 10% 0 0% 2001 2002 2003 2004 Source : IDC Asia/Pacific, December 2002 (prelim)

  14. Broadband Access Potential Subscribers (‘000s) Revenue (US$M) Satellite 14,000 35,000 WLAN* Satellite 12,000 FWA WLAN 30,000 Metro Ethernet FWA 10,000 25,000 Metro Ethernet 8,000 20,000 Cable Cable 6,000 15,000 4,000 10,000 xDSL xDSL 2,000 5,000 0 0 2001 2002 2003 2004 2001 2002 2003 2004 * double counting due to it being positioned as a value added service Source : IDC Asia/Pacific, December 2002 (prelim)

  15. The Rise of 802.11 Service • WLAN penetration in the enterprise segment • 10% in Korea; 7% in PRC; 15% in Australia • less than 10% in many Asian markets • Moving from traditional verticals to mainstream corporate segment • Manufacturing, Logistics/Warehousing to Conference/Meeting rooms, Training classes • Service-based access • Airports, Airline Lounges, Cafes, Community Centers, Libraries • Office Buildings • New opportunity in the residential market • 802.11 in the LAN environment and Broadband access for WAN connectivity

  16. Key Broadband Deployment Drivers eBiz & eCom Implementation Extranet Implementation Intranet Implementation Distance Training & Learning Video & Multimedia Streaming Transport Voice High Speed Data Transfer Pure Internet Access 0% 10% 20% 30% 40% No.of respondents Source: IDC Asia/Pacific, Enterprise User Survey (1H2002)

  17. Main Network Infrastructure Concern • In 2002, 12% of overall IT budget was spent on security solutions • In 2003, this proportion is projected to grow to 15% • >50% of the respondents indicated that IT security threats stayed the same over the last 1 year • However, close to 40% stated an increase Cost Scalability Compatibility Lack of Technical Knowledge Bandwidth Network Management Network Security 0% 10% 20% 30% 40% 50% No. of respondents Source: IDC Asia/Pacific, Enterprise User Survey (1H2002)

  18. Security is Key Regional Measure using Vertical Mix Issues 1st 2nd 3rd Cost 23% 16% 34% Network 43% 13% 16% Security Network Mngt 9% 22% 12% Compatibility 7% 23% 12% Lack of 4% 12% 10% Knowledge Source: IDC Asia/Pacific, SMB (<250 employees) Survey - June 2002

  19. Wireless Subscribers 350,000 Subscribers (000s) Thailand Taiwan 300,000 Singapore 250,000 PRC Philippines 200,000 Malaysia Korea 150,000 India 100,000 Hong Kong Australia 50,000 0 1Q2002 2Q2002 3Q2002 Source : IDC Asia/Pacific, December 2002 (prelim)

  20. Wireless $$ 16,000 Revenue (US$M) Thailand Taiwan 14,000 Singapore 12,000 PRC 10,000 Philippines Malaysia 8,000 Korea 6,000 India Hong Kong 4,000 Australia 2,000 0 1Q2002 2Q2002 3Q2002 Source : IDC Asia/Pacific, December 2002 (prelim)

  21. Wireless Data $$ 35% 700 30% 600 Data Services Messaging 25% 500 Other Data 20% 400 % of Wireless Services Revenue Revenue (US$M) 15% 300 10% 200 5% 100 0% 0 India PRC Korea Taiwan Thailand Australia Malaysia Singapore Philippines Hong Kong Source : IDC Asia/Pacific, December 2002 (prelim)

  22. Illustration... • There are 4 common entry approaches for GSPs: • Partnership with a local carrier (typically the incumbent) • Direct presence with a local license (typically a value-added service license) • Equity stake • Combination of the above 2 or 3 approaches

  23. Illustration • In Korea, KT has an international connectivity agreement with NTT Comm and Infonet. Say CHT’s total international revenue is US$100m, out of which US$30m was carried over NTT’s infrastructure and the remaining US$70m over Infonet’s infrastructure. • If the margin and related costs were equivalent to US$5m for NTT Comm and US$20m for Infonet, then the revenue reported by both GSPs from Korea would be: • NTT Comm = US$25m • Infonet = US$50m • In this research, we will credit the US$100m to KT and nothing to 2 GSPs.

  24. Competitive Landscape - Core Data Asia/Pacific (ex Japan) 2002 Revenue Shares Powertel Others 1% 15% China Telecom PLDT 18% Singtel 1% 5% MTNL Hanaro AAPT 1% Hinet 1% 2% 3% VSNL 2% Telekom Telstra BSNL Malaysia 16% 2% 2% Worldcom Dacom 1% 2% Optus 3% PCCW Equant 2% 1% Thrunet KT China Netcom 1% 13% 9% Source : IDC Asia/Pacific, December 2002 (prelim)

  25. Competitive Landscape - Access Data Asia/Pacific (ex Japan) 2002 Revenue Shares Others KT EBT 14% 23% 1% Gigamedia 1% Thrunet Dacom 6% Seednet 1% I-Cable 1% Onse 1% China Telecom 2% AAPT 4% 1% Optus Hanaro 2% 13% PCCW China Netcom 4% Dreamline 3% 1% SingTel StarHub (SCV) CTI/HKBN Telstra 1% 1% 1% Hinet 10% 10% Source : IDC Asia/Pacific, December 2002 (prelim)

  26. Competitive Landscape - Wireless Asia/Pacific (ex Japan) Q1-Q3 2002 Revenue Shares Vodafone LG Telecom Others Chunghwa 1% 2% 10% Telecom Globe Telecom 3% 1% MobileOne China Mobile Celcom 1% 33% 1% Hutchison Advanced Info 2% Service 2% Far EasTone Taiwan Cellular 2% Corp 3% Telstra Mobile Optus Mobile Singtel 3% 3% 1% SK Telecom Smart Maxis Communications 11% Total Access KTF China Unicom 2% 1% Communication 5% 10% 2% Source : IDC Asia/Pacific, December 2002 (prelim)

  27. Summary • APeJ will continue to generate positive growth • PRC, PRC, PRC • Voice will be a key driver to generate higher ARPU in the Business segment • IP-VPN & VAS will generate the highest growth in the core data segment • Broadband overtakes dial-up and xDSL remains the dominant segment: Subscription vs $$ • Wireless is now a saturated market in many parts of the region: Is higher ARPU possible?

  28. Thank You For more information, please contact IDC at 65-6226-0330 or visit our website at www.idc.com

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