1 The developed Asia–Pacific telecoms market: interim forecast update 2013–2018September 2013 Tom Mowat and Satvik Singhania

2 About this report This report provides:an interim update of our 5-year forecast of more than 60 mobile and fixed KPIs for the developed Asia–Pacific (DVAP) region as a whole and for key countries, which was previously published in March 20131 an extension of the forecast horizon to 2018 an explanation of the significant changes to our previous forecasts. Upward or downward revisions to our previous forecasts occurred mainly for the following reasons: market developments – some drivers were stronger or weaker than previously expected, based on the latest reported operator and regulator data changes to the macroeconomic outlook, competitive and regulatory environment changes to historical data because of newly available information, including from operators’ and regulators’ reports. For the complete data set, see the accompanying Excel file at Figure 1: Summary of report coverage [Source: Analysys Mason, 2013] Geographical coverage Major KPIs Regions modelled: developed Asia– Pacific Countries modelled individually Australia Hong Kong Japan Singapore South Korea Taiwan Connections Revenue Mobile Handset, mobile broadband, M2M2 Prepaid, contract 2G, 3G, 4G Smartphone, non-smartphone Fixed Voice, broadband, IPTV2, dial-up Narrowband voice, VoBB DSL, FTTH/B, cable, BFWA, other Service, retail Handset voice, messaging, data Voice, broadband, IPTV2, dial-up, BNS ARPU Voice traffic Mobile: SIMs, handset Handset voice, data Fixed and mobile Outgoing minutes, MoU 1 For more information, see Analysys Mason’s The developed Asia–Pacific telecoms market: trends and forecasts 2012–2017. Available at 2 New KPIs added to the forecast coverage.

3 Contents [1] Executive summarySlide no. Slide no. Executive summary Growth in handset data and broadband services will drive the telecoms market in the developed Asia–Pacific region during 2012–2018 We have revised our retail revenue forecast for DVAP from decreasing to increasing, driven by growth in handset data and fixed revenue Mobile: significant changes since our previous developed Asia–Pacific forecast (more details in the individual country slides) Fixed: significant changes since our previous developed Asia–Pacific forecast (more details in the individual country slides) Regional forecasts Mobile networks will account for 73% of voice connections and 37% of broadband connections in DVAP by 2018 Smartphones will account for 65% of active broadband connections and 76% of handsets by 2018; 18% of handsets will be prepaid connections Demand for fixed broadband will not be enough to offset declining fixed voice revenue during the forecast period Japan and South Korea are the two largest markets for M2M and IPTV in DVAP We expect that operators in DVAP will be able to maintain their price points leading to modest growth in overall revenue DVAP had more than 28 million LTE connections at the end of 2012 – 74% of mobile broadband connections and 68% of handsets will be 4G by 2018 Individual country forecasts Australia: telecoms retail revenue will decline to AUD24.4 billion in 2018, as mobile and fixed voice revenue continue to decline Australia: 4G take-up has accelerated, and VoIP has attracted fewer consumers than expected Hong Kong: telecoms retail revenue will reach almost HKD60 billion in 2018, as data revenue growth offsets the decline in voice Hong Kong: 4G take-up continues to disappoint, while growth in fixed fibre broadband has exceeded expectations Japan: retail revenue will reach JPY11.4 trillion in 2018, because broadband and data revenue will offset declining voice revenue Japan: fixed broadband connections exceeded expectations, while fixed voice prices are proving resilient Singapore: telecoms retail revenue will remain at SGD5.4 billion in 2018, but data revenue will account for a larger share Singapore: 2G is proving to be more resilient than expected, but handset data revenue has exceeded previous expectations Singapore: fixed voice minutes decreased in 2011 and 2012 South Korea: telecoms retail revenue will decrease marginally to KRW32.2 trillion in 2018, as revenue from voice services declines South Korea: 4G continues to gain ground on 3G, with handset data revenue increasing accordingly in 2012

4 Contents [2] Slide no. South Korea: mobile broadband will add fewer subscribers than previously expected, and mobile voice traffic fell sharply Taiwan: telecoms retail revenue will decrease to TWD334 billion in 2018, as revenue from voice services decline sharply Taiwan: we forecast that 4G will launch sooner than expected, which may be linked to the stagnation of mobile broadband take-up in 2012 Taiwan: the outlook for fixed–wireless broadband has changed completely as WiMAX operators look to LTE About the authors and Analysys Mason About the authors About Analysys Mason Research from Analysys Mason Consulting from Analysys Mason

5 List of figures [1] Figure 1: Summary of report coverageFigure 2: Telecoms retail revenue by service type, developed Asia–Pacific, 2009–2018 Figure 3: Growth rates of telecoms retail revenue by service type, developed Asia–Pacific, 2009–2018 Figure 4: Telecoms retail revenue, new and previous forecasts, developed Asia–Pacific, 2017 Figure 5: Telecoms retail revenue and growth rates, new and previous forecasts, developed Asia–Pacific, 2012–2017 Figure 6: Details of how our forecast methodology for the mobile market has changed since the previous edition was published in March 2013, developed Asia–Pacific Figure 7: Details of how our forecast methodology for the fixed market has changed since the previous edition was published in March 2013, developed Asia–Pacific Figure 8: Fixed and mobile voice connections, developed Asia–Pacific, 2009–2018 Figure 9: Broadband access connections by technology, developed Asia– Pacific, 2009–2018 Figure 10: Broadband connections by type, developed Asia–Pacific, 2009– 2018 Figure 11: Smartphones as a percentage of mobile handsets, developed Asia–Pacific, 2009–2018 Figure 12: Mobile handset connections by type, developed Asia–Pacific, 2009–2018 Figure 13: Fixed connections and penetration by service type, developed Asia–Pacific, 2009–2018 Figure 14: Fixed telecoms retail revenue by service type, developed Asia– Pacific, 2009–2018 Figure 15: IPTV penetration by country, developed Asia–Pacific 2009–2018 Figure 16: M2M connections by country, developed Asia–Pacific, 2009–2018 Figure 17: M2M connections by country (excluding Japan), developed Asia– Pacific, 2009–2018 Figure 18: Fixed and mobile telecoms retail revenue, new and previous forecasts, developed Asia–Pacific, 2009–2017 Figure 19: Fixed and mobile connections by type, new and previous forecasts, developed Asia–Pacific, 2009–2017 Figure 20: 4G’s share of mobile handset and mobile broadband connections, new and previous forecasts, developed Asia–Pacific, 2009–2017 Figure 21: Telecoms retail revenue by service type, Australia, 2009–2018 Figure 22: Telecoms retail revenue by service type, and growth rates, Australia, 2009–2018 Figure 23: Connections by type, and growth rates, Australia, 2009–2018 Figure 24: Mobile active connections by technology generation, new and previous forecasts, Australia, 2009–2017 Figure 25: Fixed broadband connections by technology, Australia, 2009– 2017 Figure 26: Telecoms retail revenue by service type, Hong Kong, 2009–2018 Figure 27: Telecoms retail revenue by service category, and growth rates, Hong Kong, 2009–2018

6 List of figures [2] Figure 28: Connections by type, and growth rates, Hong Kong, 2009–2018 Figure 29: Mobile active connections by technology generation, new and previous forecasts, Hong Kong, 2009–2017 Figure 30: VoBB, DSL and FTTH/B connections, new and previous forecasts, Hong Kong, 2009–2017 Figure 31: Telecoms retail revenue by service type, Japan, 2009–2018 Figure 32: Telecoms retail revenue by service type, and growth rates, Japan, 2009–2018 Figure 33: Connections by type, and growth rates, Japan, 2009–2018 Figure 34: Mobile broadband revenue and connections, new and previous forecasts, Japan, 2009–2017 Figure 35: Fixed service revenue, and fixed broadband and BFWA connections, new and previous forecasts, Japan, 2009–2017 Figure 36: Telecoms retail revenue by service category, Singapore, 2009– 2018 Figure 37: Telecoms retail revenue by service type, and growth rates, Singapore, 2009–2018 Figure 38: Connections by type, and growth rates, Singapore, 2009–2018 Figure 39: Mobile active connections by technology generation, new and previous forecasts, Singapore, 2009–2017 Figure 40: Mobile revenue by service, new and previous forecasts, Singapore, 2009–2017 Figure 41: Fixed voice outgoing minutes and minutes of use, new and previous forecasts, Singapore, 2008–2017 Figure 42: Telecoms retail revenue by service type, South Korea, 2009– 2018 Figure 43: Telecoms retail revenue by service type, and growth rates, South Korea, 2009–2018 Figure 44: Connections by type, and growth rates, South Korea, 2009–2018 Figure 45: Mobile active connections by technology generation, new and previous forecasts, South Korea, 2009–2017 Figure 46: Mobile messaging and mobile handset data revenue, new and previous forecasts, South Korea, 2009–2017 Figure 47: Mobile broadband revenue and connections, new and previous forecasts, South Korea, 2009–2017 Figure 48: Mobile voice revenue and outgoing traffic, new and previous forecasts, South Korea, 2008–2017 Figure 49: Telecoms retail revenue by service type, Taiwan, 2009–2018 Figure 50: Telecoms retail revenue by service type, and growth rates, Taiwan, 2009–2018 Figure 51: Connections by type, and growth rates, Taiwan, 2009–2018 Figure 52: Active mobile connections by technology generation, new and previous forecasts, Taiwan, 2009–2017 Figure 53: Mobile broadband revenue and connections, new and previous forecasts, Taiwan, 2009–2017 Figure 54: BFWA revenue and connections, new and previous forecasts, Taiwan, 2009–2017 Figure 55: Mobile voice revenue and outgoing mobile voice traffic, new and previous forecasts, Taiwan, 2009–2017

7 Executive summary Regional forecasts Individual country forecasts About the author and Analysys Mason

8 Growth in handset data and broadband services will drive the telecoms market in the developed Asia–Pacific region during 2012–2018 Figure 2: Telecoms retail revenue by service type, developed Asia–Pacific, 2009–2018 [Source: Analysys Mason, 2013] Figure 3: Growth rates of telecoms retail revenue by service type, developed Asia–Pacific, 2009–2018 [Source: Analysys Mason, 2013] Service type Revenue (USD billion) CAGR 2012 2018 2009–2012 2012–2018 Mobile voice 57.9 43.1 –10.1% –4.8% Mobile messaging 6.0 5.6 4.1% –1.2% Mobile handset data 62.9 86.4 15.6% 5.4% Mobile broadband1 7.9 13.3 31.2% 8.9% M2M 0.8 1.3 20.2% 7.7% Fixed voice2 37.4 29.2 –4.1% –4.0% Fixed broadband3 37.5 45.2 3.2% Business network services 13.4 14.6 1.4% TOTAL 223.9 238.6 1.0% 1.1% 1 Includes USB modem, and mid- and large-screen, but not handset-based data. 2 Includes narrowband, VoBB and dial-up Internet access. 3 Includes IPTV. Mobile handset data services and mobile broadband offer the strongest opportunities for revenue growth in the next 6 years in the DVAP region, and they will help offset declining messaging and voice revenue. The M2M market will also grow rapidly, but will represent a small share of total mobile revenue.

9 We have revised our retail revenue forecast for DVAP from decreasing to increasing, driven by growth in handset data and fixed revenue Figure 4: Telecoms retail revenue, new and previous forecasts, developed Asia–Pacific, 2017 [Source: Analysys Mason, 2013] Our forecasts for telecoms retail revenue for developed Asia– Pacific have changed. We now predict growth rather than a slight decline. Handset data revenue is replacing mobile voice revenue more quickly than we had expected, and mobile VoIP and instant messaging are putting further pressure on mobile voice minutes and prices. Prices in the fixed voice market are expected to hold up better than previously expected. The number of fixed broadband connections has also slightly increased because of a strong showing by fibre and fixed–wireless broadband in some countries. We have added M2M and IPTV revenue to our forecasts, both of which will grow to 2017. Figure 5: Telecoms retail revenue and growth rates, new and previous forecasts, developed Asia–Pacific, 2012–2017 [Source: Analysys Mason, 2013] 2012 2017 CAGR New (USD billion) 223.9 236.7 1.12% Previous (USD billion) 216.5 212.8 –0.34%

10 Mobile: significant changes since our previous developed Asia–Pacific forecast (more details in the individual country slides) Figure 6: Details of how our forecast methodology for the mobile market has changed since the previous edition was published in March 2013, developed Asia– Pacific [Source: Analysys Mason, 2013] Change Description New KPIs: Mobile M2M connections and revenue are included and modelled for every country  We estimate that DVAP had slightly more than 10 million mobile M2M connections at the end of 2012, accounting for 3.7% of all mobile connections in the region. We forecast that M2M connections will reach 44.7 million by the end of 2018, accounting for 12.5% of all mobile connections. M2M revenue will grow by 56% in the next 6 years, reaching USD1.3 billion in 2018, up from USD0.8 billion in 2012, although it will still account for less than 1% of total mobile revenue. 4G adoption rates differed from our previous expectations in many countries South Korea is experiencing high growth in LTE. We expect that the number of 4G connections will grow at a 19.9% (CAGR 2012–2018), up from our previous forecast. LTE in Hong Kong has not experienced the sharp rise in take-up in the latter half of 2012 that we had expected, causing us to revise our forecast down. We now expect the number of connections to increase at a 55.6% CAGR during 2012–2018. Mobile broadband in Japan, South Korea and Taiwan will grow at a slower rate than we had expected We have sharply decreased our forecast for mobile broadband connections, and now expect it to grow at a 12.8% CAGR during 2012–2018, which is down from our previous forecast. This will led by Japan, South Korea and Taiwan, which together will grow at a 17.5% CAGR during 2012–2018, down from our previous forecast. The demand for smartphones has led to limited growth in USB modems, even after the launch of LTE in South Korea and Japan. We have revised up our forecast for revenue from handset data Revenue from handset data was higher in 2012 than we had expected, with the growth being led by South Korea, where LTE-A has been launched and take-up was high. Handset data revenue in DVAP will grow at 5.4% CAGR during 2012–2018, up from our previous forecast.

11 Fixed: significant changes since our previous developed Asia–Pacific forecast (more details in the individual country slides) Figure 7: Details of how our forecast methodology for the fixed market has changed since the previous edition was published in March 2013, developed Asia– Pacific [Source: Analysys Mason, 2013] Change Description New KPIs: IPTV subscribers and revenue added for every country  We have added IPTV connections and revenue to our forecasts. We expect IPTV connections to increase to 22.2 million by 2018, up from 13.8 million at the end of Revenue from IPTV in the same period is expected to increase almost 100% to USD4.6 billion in 2018. We have revised down our forecast for VoIP We have lowered our forecast for VoIP connections in DVAP, and we now expect it to grow at a 4.7% CAGR during 2012–2018, down from our previous forecast. This decrease was led by Australia – we revised down our forecast to a 14.2% CAGR during 2012–2018 – and South Korea – revised down to a 4.4% CAGR. We have revised down our forecasts for fixed voice minutes We have revised down our forecast for total outgoing minutes from fixed voice connections to reflect a decline in MoU in the last year that was more rapid than we had previously expected. We now expect it to decline at a –4.1% CAGR during 2012–2018. Fibre broadband (FTTH/B) replaced DSL faster than previously expected in Hong Kong DSL continued its sharp decline in Hong Kong, and we now expect it to decline at a –19.6% CAGR during 2012–2018. Consumers are moving from DSL to fibre at a faster rate than expected, and we expect FTTH/B to grow at an 8.5% CAGR during 2012–2018, up from our previous forecast. We have revised our forecast for BFWA connections, after significant changes in Japan and Taiwan in 2012 We have increased our forecast for BFWA connections in Japan, and we now expect it to grow at a 12.7% CAGR during 2012–2018. BFWA take-up was strong in Taiwan in 2011, but stagnated in 2012 and started to decline in when support for WiMAX declined because of the imminent launch of LTE. We now expect BFWA connections to decline, and cease to exist by 2018, a change from our previous growth estimate.

12 Executive summary Regional forecasts Individual country forecasts About the author and Analysys Mason

13 Mobile networks will account for 73% of voice connections and 37% of broadband connections in DVAP by 2018 Figure 8: Fixed and mobile voice connections, developed Asia–Pacific, 2009–2018 [Source: Analysys Mason, 2013] Figure 9: Broadband access connections by technology, developed Asia– Pacific, 2009–2018 [Source: Analysys Mason, 2013]

14 Smartphones will account for 65% of active broadband connections and 76% of handsets by 2018; 18% of handsets will be prepaid connections Figure 10: Broadband connections by type, developed Asia–Pacific, 2009– 2018 [Source: Analysys Mason, 2013] Figure 11: Smartphones as a percentage of mobile handsets, developed Asia–Pacific, 2009–2018 [Source: Analysys Mason, 2013] Figure 12: Mobile handset connections by type, developed Asia–Pacific, 2009–2018 [Source: Analysys Mason, 2013]

15 Demand for fixed broadband will not be enough to offset declining fixed voice revenue during the forecast period Figure 13: Fixed connections and penetration by service type, developed Asia–Pacific, 2009–2018 [Source: Analysys Mason, 2013] Figure 14: Fixed telecoms retail revenue by service type, developed Asia– Pacific, 2009–2018 [Source: Analysys Mason, 2013]

16 Japan and South Korea are the two largest markets for M2M and IPTV in DVAPOur forecasts now include M2M and IPTV. M2M: Growth will be driven by Japan, followed by Australia and South Korea. Hong Kong, Singapore and Taiwan will account for just 13% of the M2M connections in DVAP by IPTV: The absolute growth in connections will be driven by South Korea and Japan – together they will account for more than 73% of all IPTV connections in DVAP by Hong Kong has the highest penetration rate and will exceed 80% of households by Japan will have the lowest penetration in the region – 7.5% in 2012 and 11.5% in 2018 – but will have the second-highest number of connections. Figure 16: M2M connections by country, developed Asia–Pacific, 2009–2018 [Source: Analysys Mason, 2013] Figure 15: IPTV penetration by country, developed Asia–Pacific 2009–2018 [Source: Analysys Mason, 2013 Figure 17: M2M connections by country (excluding Japan), developed Asia– Pacific, 2009–2018 [Source: Analysys Mason, 2013]

17 We expect that operators in DVAP will be able to maintain their price points leading to modest growth in overall revenue Figure 18: Fixed and mobile telecoms retail revenue, new and previous forecasts, developed Asia–Pacific, 2009–2017 [Source: Analysys Mason, 2013]1 Figure 19: Fixed and mobile connections by type, new and previous forecasts, developed Asia–Pacific, 2009–2017 [Source: Analysys Mason, 2013]

18 DVAP had more than 28 million LTE connections at the end of 2012 – 74% of mobile broadband connections and 68% of handsets will be 4G by 20181 Figure 20: 4G’s share of mobile handset and mobile broadband connections, new and previous forecasts, developed Asia–Pacific, 2009–2017 [Source: Analysys Mason, 2013] Australia, Hong Kong, Japan, Singapore and South Korea have launched 4G. It is expected to be launched in 2014 in Taiwan. 4G accounted for more than 28.1 million of the 271.3 million active mobile devices in DVAP at the end of 2012 (not including M2M). These 4G connections included 23.4 million handsets and 4.7 million broadband connections. We have altered our expectations for the percentage of mobile broadband connections that will be 4G, based on new available data for 2012 where it exceeded our initial forecasts. 1 Our definition of 4G includes LTE only.

19 Executive summary Regional forecasts Individual country forecasts About the author and Analysys Mason

20 Connections (million)Australia: telecoms retail revenue will decline to AUD24.4 billion in 2018, as mobile and fixed voice revenue continue to decline Figure 21: Telecoms retail revenue by service type, Australia, 2009–2018 [Source: Analysys Mason, 2013] Figure 22: Telecoms retail revenue by service type, and growth rates, Australia, 2009–2018 [Source: Analysys Mason, 2013] Service type Revenue (AUD billion) CAGR 2012 2018 2009–2012 2012–2018 Mobile voice 6.6 5.2 –5.7% –3.7% Mobile messaging 2.6 2.2 3.2% –2.4% Mobile handset data 3.2 37.3% 6.0% Mobile broadband1 1.9 2.0 9.8% 0.7% M2M 0.1 0.3 14.8% 11.5% Fixed voice2 7.1 5.7 –5.8% –3.6% Fixed broadband3 3.6 3.0% 1.8% Business network services 1.8 2.1 10.2% TOTAL 25.6 24.4 0.2% –0.8% 1 Includes USB modem, and mid- and large-screen, but not handset-based data. 2 Includes narrowband, VoBB and dial-up Internet access. 3 Includes IPTV. Figure 23: Connections by type, and growth rates, Australia, 2009–2018 [Source: Analysys Mason, 2013] Connection type Connections (million) CAGR 2012 2018 2009–2012 2012–2018 Mobile handsets 22.3 25.2 2.1% 2.0% Mobile broadband 5.7 8.0 28.8% 5.8% M2M 1.5 5.9 20.6% 25.1% Fixed voice 13.0 13.5 0.8% 0.7% Fixed broadband 7.2 4.4% 3.3% IPTV 0.4 1.2 N/a 20.9%

21 Australia: 4G take-up has accelerated, and VoIP has attracted fewer consumers than expectedTake-up of 4G has been faster than expected. Vodafone Hutchison Australia launched the service in June 2013, Telstra trialled LTE-advanced in August 2013 and Optus deployed dual-mode TD/FDD LTE in June 2013. New 2012 data showed 4G take-up was better than expected. 3G performed worse than expected and we have significantly lowered our forecasts. The switchover to 4G mainly affects the mix of 3G and 4G customers – the 2G base will be largely unaffected we have revised down our forecast for the number of 2G customers during 2012– 2018 as 2G customers continue to migrate to 3G. We have downgraded our forecasts for VoIP subscribers because Telstra has limited its focus to SMEs. Telstra upgraded its exchanges in 2011 to provide better- quality VoIP, but we have yet to see any signs of this service being available to residential subscribers. We have revised up our forecast for FTTB take-up based on newly available data for 2012. The National Broadband Network (NBN) experienced minor delays in 2013 to its targets for rolling out fibre to households. The original June 2013 target is expected to be met by September Take-up in 2012 was slightly higher than we had expected in our previous forecast. Figure 24: Mobile active connections by technology generation, new and previous forecasts, Australia, 2009–2017 [Source: Analysys Mason, 2013] Figure 25: Fixed broadband connections by technology, Australia, 2009– 2017 [Source: Analysys Mason, 2013]

22 Connections (million)Hong Kong: telecoms retail revenue will reach almost HKD60 billion in 2018, as data revenue growth offsets the decline in voice Figure 26: Telecoms retail revenue by service type, Hong Kong, 2009–2018 [Source: Analysys Mason, 2013] Figure 27: Telecoms retail revenue by service category, and growth rates, Hong Kong, 2009–2018 [Source: Analysys Mason, 2013] Service type Revenue (HKD billion) CAGR 2012 2018 2009–2012 2012–2018 Mobile voice 9.4 6.8 –7.0% –5.3% Mobile messaging 7.6 5.6 35.6% –4.9% Mobile handset data 5.1 10.6 238.0% 13.0% Mobile broadband1 3.6 4.1 21.5% 2.2% M2M 0.1 0.2 18.6% 9.2% Fixed voice2 8.7 5.9 –4.2% –5.8% Fixed broadband3 7.3 9.1 10.5% 3.9% Business network services 15.3 17.2 –2.8% 1.9% TOTAL 57.2 59.7 5.3% 0.7% 1 Includes USB modem, and mid- and large-screen, but not handset-based data. 2 Includes narrowband, VoBB and dial-up Internet access. 3 Includes IPTV. Figure 28: Connections by type, and growth rates, Hong Kong, 2009–2018 [Source: Analysys Mason, 2013] Connection type Connections (million) CAGR 2012 2018 2009–2012 2012–2018 Mobile handsets 11.9 13.8 6.9% 2.5% Mobile broadband 2.2 3.0 24.3% 5.6% M2M 0.3 1.4 27.1% 31.9% Fixed voice 4.2 0.5% –0.1% Fixed broadband 2.6 4.9% 2.6% IPTV 2.0 25.0% 6.4%

23 Hong Kong: 4G take-up continues to disappoint, while growth in fixed fibre broadband has exceeded expectations All five operators had launched 4G services by mid-2012, but take-up has been lacklustre. Less than 3% of the mobile subscriber base had signed up for 4G by the end of Therefore, we have significantly revised our forecasts, which now show that of 4G take-up in Hong Kong will be slower than in our previous forecast. 2G was more resilient than we had expected, and have revised our forecasts upwards accordingly. 3G performed better than expected given the slow take-up of 4G, and we have significantly revised our forecasts up. The growth of residential VoBB subscribers decreased in 2012 compared to previous years. The number of VoBB subscribers grew 15% and 22% in and 2011 respectively, but only 9% in We have revised our forecasts down accordingly. FTTH/B has been revised up at the expense of DSL based on new data for 2012. The FTTH/B market in Hong Kong is competitive with service providers competing on both speed and price. Coverage is steadily improving. FTTH/B take-up increased, and DSL decreased, more in 2012 than we had expected, and we have revised our forecasts accordingly. Figure 29: Mobile active connections by technology generation, new and previous forecasts, Hong Kong, 2009–2017 [Source: Analysys Mason, 2013] Figure 30: VoBB, DSL and FTTH/B connections, new and previous forecasts, Hong Kong, 2009–2017 [Source: Analysys Mason, 2013]

24 Connections (million)Japan: retail revenue will reach JPY11.4 trillion in 2018, because broadband and data revenue will offset declining voice revenue Figure 31: Telecoms retail revenue by service type, Japan, 2009–2018 [Source: Analysys Mason, 2013] Figure 32: Telecoms retail revenue by service type, and growth rates, Japan, 2009–2018 [Source: Analysys Mason, 2013] Service type Revenue (JPY billion) CAGR 2012 2018 2009–2012 2012–2018 Mobile voice 2524.0 1875.5 –12.1% –4.8% Mobile messaging 10.2 6.7 –29.7% –6.8% Mobile handset data 3754.4 4418.6 10.2% 2.8% Mobile broadband1 340.7 701.3 53.7% 12.8% M2M 38.9 54.8 21.7% 5.9% Fixed voice2 1682.3 1357.0 –4.2% –3.5% Fixed broadband3 2033.7 2485.0 5.2% 3.4% Business network services 461.7 491.0 –0.0% 1.0% TOTAL 10 846.0 11 389.9 0.1% 0.8% 1 Includes USB modem, and mid- and large-screen, but not handset-based data. 2 Includes narrowband, VoBB and dial-up Internet access. 3 Includes IPTV. Figure 33: Connections by type, and growth rates, Japan, 2009–2018 [Source: Analysys Mason, 2013] Connection type Connections (million) CAGR 2012 2018 2009–2012 2012–2018 Mobile handsets 123.7 133.7 3.8% 1.3% Mobile broadband 7.6 21.7 69.1% 19.1% M2M 6.5 26.1 30.5% 26.2% Fixed voice 68.3 59.6 –2.4% –2.2% Fixed broadband 39.6 46.9 6.8% 2.8% IPTV 3.8 5.8 35.2% 7.6%

25 Japan: fixed broadband connections exceeded expectations, while fixed voice prices are proving resilient We have revised down our forecast for mobile broadband connections and revenue. Mobile broadband access via USB modems is under pressure from smartphones and take-up of mobile broadband has been historically poor in Japan. Tablets and other connected devices will generate growth, but we have revised this down to reflect our more pessimistic view of this market. Fixed broadband connection numbers have increased. Fixed–wireless broadband connections in particular showed strong take-up in 2012, with UQ Communications (WiMAX) exceeding previous expectations. We have revised up total fixed revenue because of strong resilience in fixed voice prices, and growth in broadband connections. Fixed voice prices are not declining as rapidly as we had expected, and although the forecast for fixed voice connections is the same as our previous forecast, we significantly revised up the forecast for revenue from fixed voice. Figure 34: Mobile broadband revenue and connections, new and previous forecasts, Japan, 2009–2017 [Source: Analysys Mason, 2013] Figure 35: Fixed service revenue, and fixed broadband and BFWA connections, new and previous forecasts, Japan, 2009–2017 [Source: Analysys Mason, 2013]

26 Connections (million)Singapore: telecoms retail revenue will remain at SGD5.4 billion in 2018, but data revenue will account for a larger share Figure 36: Telecoms retail revenue by service category, Singapore, 2009– 2018 [Source: Analysys Mason, 2013] Figure 37: Telecoms retail revenue by service type, and growth rates, Singapore, 2009–2018 [Source: Analysys Mason, 2013] Service type Revenue (SGD billion) CAGR 2012 2018 2009–2012 2012–2018 Mobile voice 2.2 1.9 0.1% –1.9% Mobile messaging 0.6 0.5 4.4% –0.9% Mobile handset data 0.8 36.6% 7.6% Mobile broadband1 0.3 0.2 22.9% –5.2% M2M 0.0 25.9% 10.8% Fixed voice2 –2.9% –3.2% Fixed broadband3 1.1 11.1% 4.2% Business network services –3.3% –0.1% TOTAL 5.4 4.6% 0.2% 1 Includes USB modem, and mid- and large-screen, but not handset-based data. 2 Includes narrowband, VoBB and dial-up Internet access. 3 Includes IPTV. Figure 38: Connections by type, and growth rates, Singapore, 2009–2018 [Source: Analysys Mason, 2013] Connection type Connections (million) CAGR 2012 2018 2009–2012 2012–2018 Mobile handsets 6.6 7.5 3.8% 2.2% Mobile broadband 1.1 1.5 25.2% 6.0% M2M 0.3 1.6 34.7% 33.9% Fixed voice 2.0 1.6% 0.4% Fixed broadband 1.4 1.7 7.6% 3.4% IPTV 0.4 0.7 27.7% 9.0%

27 Singapore: 2G is proving to be more resilient than expected, but handset data revenue has exceeded previous expectations We have revised our forecasts for 2G, 3G and 4G subscribers based on new data for 2012. 2G was more resilient than expected and growth in 3G subscribers slowed down considerably because of the focus on LTE – SingTel reached nationwide coverage for 4G and upgraded its network to offer 150Mbps in the second quarter of 2013. Operators have focused on increasing data revenue. Operators are trying to increase usage by offering multiple SIMs attached to a single mobile phone number, enabling a customer to use several devices at the same time. Operators have also launched ever-more sophisticated mobile data services, such as SingTel’s AMPed music download portal and voice-based search services deF!ND for dining and events, M1’s app store and StarHub’s TV on Mobile app for iPhones and Android devices. These efforts resulted in a significant rise in revenue from handset data in 2012, and we have revised up our forecast accordingly. Growth in mobile broadband stagnated in 2012. The number of mobile broadband connections grew by 4% in 2012, compared to 19% in This might be because of a rise in LTE handsets and data tethering, which reduces the need for a separate mobile broadband connection. Figure 39: Mobile active connections by technology generation, new and previous forecasts, Singapore, 2009–2017 [Source: Analysys Mason, 2013] Figure 40: Mobile revenue by service, new and previous forecasts, Singapore, 2009–2017 [Source: Analysys Mason, 2013]

28 Singapore: fixed voice minutes decreased in 2011 and 2012Fixed voice traffic declined significantly in 2012. New data revealed that fixed voice minutes of use (MoU) significantly declined in 2011 and 2012, and we have revised our forecasts accordingly. MoU dropped more than 26% between 2010 and 2012, having been stable in 2009–2010. This could be because of several factors. One reason could fixed–mobile substitution – outgoing minutes for mobile increased in 2011 and 2012 by slightly more than we had expected. We have also slightly revised down our VoIP forecast for the next 3 years, which has had a downward effect on the total number of outgoing minutes. Figure 41: Fixed voice outgoing minutes and minutes of use, new and previous forecasts, Singapore, 2008–2017 [Source: Analysys Mason, 2013]

29 Connections (million)South Korea: telecoms retail revenue will decrease marginally to KRW32.2 trillion in 2018, as revenue from voice services declines Figure 42: Telecoms retail revenue by service type, South Korea, 2009–2018 [Source: Analysys Mason, 2013] Figure 43: Telecoms retail revenue by service type, and growth rates, South Korea, 2009–2018 [Source: Analysys Mason, 2013] Service type Revenue (KRW billion) CAGR 2012 2018 2009–2012 2012–2018 Mobile voice 10 495.6 7368.0 –10.6% –5.7% Mobile messaging 1211.4 1051.3 –1.9% –2.3% Mobile handset data 8341.1 11 445.6 43.5% 5.4% Mobile broadband1 450.1 789.5 26.4% 9.8% M2M 92.3 147.3 21.6% 8.1% Fixed voice2 4310.7 3069.1 –4.8% –5.5% Fixed broadband3 5041.1 6046.0 7.7% 3.1% Business network services 2347.6 2296.8 1.1% –0.4% TOTAL 32 289.9 32 213.5 2.1% –0.0% 1 Includes USB modem, and mid- and large-screen, but not handset-based data. 2 Includes narrowband, VoBB and dial-up Internet access. 3 Includes IPTV. Figure 44: Connections by type, and growth rates, South Korea, 2009–2018 [Source: Analysys Mason, 2013] Connection type Connections (million) CAGR 2012 2018 2009–2012 2012–2018 Mobile handsets 52.2 54.2 3.4% 0.6% Mobile broadband 1.4 2.8 28.0% 12.0% M2M 1.2 5.9 31.9% 30.0% Fixed voice 30.3 32.5 4.2% 1.2% Fixed broadband 19.4 21.8 5.2% 2.0% IPTV 6.5 10.4 50.1% 8.3%

30 South Korea: 4G continues to gain ground on 3G, with handset data revenue increasing accordingly in 2012 We have revised up our 4G forecasts following the launch of LTE-A and the removal of the sign-up fee for new users. LTE continues to defy expectations in South Korea. The Ministry of Science, ICT and Future Planning of South Korea has decided to abolish the sign-up fee charged by all three mobile operators by 2015, with massive reductions initially in 2013 and SK Telecom launched a 150Mbps LTE-A service in June 2013, which has had very aggressive take-up, while LG Uplus has also launched a LTE-A service. We have revised up our 4G forecasts accordingly, with 3G falling more rapidly given that the results for mid were slightly lower than our previous expectations. We have revised our forecasts for revenue from mobile messaging and handset data, given the results of 2012. Revenue from handset data grew more than expected in 2012, and messaging revenue held up better. Also, given the revised forecast for 4G subscribers, we expect more data usage in the future, and have therefore revised our revenue forecasts accordingly. Figure 45: Mobile active connections by technology generation, new and previous forecasts, South Korea, 2009–2017 [Source: Analysys Mason, 2013] Figure 46: Mobile messaging and mobile handset data revenue, new and previous forecasts, South Korea, 2009–2017 [Source: Analysys Mason, 2013]

31 South Korea: mobile broadband will add fewer subscribers than previously expected, and mobile voice traffic fell sharply Mobile broadband has been revised down. Access to cellular data services in South Korea has historically favoured handsets. Initial expectations that the widespread deployment and take-up of LTE would drive the adoption of more connected consumer devices have proven to be overly optimistic. Data from the last 12 months confirms that handsets will continue to dominate the market. Our mobile broadband connection forecasts and revenue have been revised accordingly. Mobile voice traffic has been revised down. Outgoing MoU sharply declined in 2012 by more than 5% after being stable in 2011 and increasing in One reason for the drop is the widespread adoption of LTE and the move to VoIP services.1 Pressure on price points for IP voice has reduced revenue from mobile voice services. Therefore, we have revised down our forecast for revenue in 2017, from KRW9 trillion to KRW7.6 trillion. Revenue has remained relatively consistent (compared with traffic) because a large proportion of ‘lost’ minutes are now delivered by CSP mobile VoIP services. Figure 47: Mobile broadband revenue and connections, new and previous forecasts, South Korea, 2009–2017 [Source: Analysys Mason, 2013] Figure 48: Mobile voice revenue and outgoing traffic, new and previous forecasts, South Korea, 2008–2017 [Source: Analysys Mason, 2013] 1 Our traffic forecasts are for switched minutes only and do not include IP unless stated.

32 Connections (million)Taiwan: telecoms retail revenue will decrease to TWD334 billion in 2018, as revenue from voice services decline sharply Figure 49: Telecoms retail revenue by service type, Taiwan, 2009–2018 [Source: Analysys Mason, 2013] Figure 50: Telecoms retail revenue by service type, and growth rates, Taiwan, 2009–2018 [Source: Analysys Mason, 2013] Service type Revenue (TWD billion) CAGR 2012 2018 2009–2012 2012–2018 Mobile voice 155.1 108.3 –4.2% –5.8% Mobile messaging 8.9 7.1 –3.4% –3.9% Mobile handset data 30.0 64.4 121.3% 13.6% Mobile broadband 9.4 16.1 32.6% 9.4% M2M 1.0 1.7 20.0% 8.3% Fixed voice 73.4 45.0 2.7% –7.8% Fixed broadband 49.6 49.5 2.0% –0.0% Business network services 36.5 41.6 4.7% 2.2% TOTAL 364.0 333.7 2.3% –1.4% 1 Includes USB modem, and mid- and large-screen, but not handset-based data. 2 Includes narrowband, VoBB and dial-up Internet access. 3 Includes IPTV. Figure 51: Connections by type, and growth rates, Taiwan, 2009–2018 [Source: Analysys Mason, 2013] Connection type Connections (million) CAGR 2012 2018 2009–2012 2012–2018 Mobile handsets 27.6 30.2 2.2% 1.5% Mobile broadband 1.2 2.5 23.3% 12.6% M2M 0.5 2.7 28.8% 31.8% Fixed voice 17.2 18.2 5.2% 1.0% Fixed broadband 5.7 6.5 4.8% 2.4% IPTV 1.7 21.4% 6.0%

33 Taiwan: we forecast that 4G will launch sooner than expected, which may be linked to the stagnation of mobile broadband take-up in 2012 We have revised our forecasts for 2G and 3G based on new available data, have brought forward the date on which we expect 4G to be launched. The number of 2G and 3G connections declined in more than we had expected. It seems that 4G will be launched in 2014, and a sale of LTE spectrum is expected in September The regulator, the National Communications Commission (NCC), has approved all seven bidders for the impending spectrum sale. Because 700MHz spectrum is available immediately for LTE deployment, we have brought forward our forecast and expect LTE to take off in 2014. Mobile broadband take-up was extremely slow in 2012. We have significantly revised down our forecast for mobile broadband connections and revenue because growth in the number of connections was slower in 2012 than we had previously expected it to be. The number of mobile broadband connections grew only 7% in 2012, having grown by 36% and 29% in 2010 and respectively. Figure 52: Active mobile connections by technology generation, new and previous forecasts, Taiwan, 2009–2017 [Source: Analysys Mason, 2013] Figure 53: Mobile broadband revenue and connections, new and previous forecasts, Taiwan, 2009–2017 [Source: Analysys Mason, 2013]

34 Taiwan: the outlook for fixed–wireless broadband has changed completely as WiMAX operators look to LTE New data on fixed–wireless broadband services showed a different from that of our previous forecast. Take-up of fixed–wireless broadband services significantly increased in 2011, but it stalled in 2012, and had declined by mid-2013. The regulator originally planned to allocate spectrum for 4G in 2015 but has brought this forward to This announcement caused pessimism with regards to WiMAX, with subscribers preferring to wait for LTE. Many WiMAX operators are considering the possibility of re-farming WiMAX spectrum in order to launch TD-LTE networks. Mobile voice traffic has been revised down. Outgoing MoU stabilised in 2012 after increasing at a CAGR of nearly 5% from 2008 to The Taiwanese regulator continued to reduce mobile calling rates annually according to a 6-year plan, but outgoing mobile MoU have increased. Therefore, we expect MoU to continue to grow, but at a much lower rate than we had previously forecast. This has influenced our revisions of the forecasts for voice traffic and revenue from mobile voice services. Figure 54: BFWA revenue and connections, new and previous forecasts, Taiwan, 2009–2017 [Source: Analysys Mason, 2013] Figure 55: Mobile voice revenue and outgoing mobile voice traffic, new and previous forecasts, Taiwan, 2009–2017 [Source: Analysys Mason, 2013]

35 Executive summary Regional forecasts Individual country forecasts About the author and Analysys Mason

36 About the authors Tom Mowat (Principal Analyst) is the lead analyst for Analysys Mason’s Asia–Pacific research programme and is based in our Singapore office. Tom recently rejoined Analysys Mason from PwC, where he was a Manager in the TMT Consulting team. He has extensive expertise in fixed and mobile broadband services, strategy and forecasting, regulatory issues, cost-modelling and the particular issues affecting telecoms markets in developing regions. His previous role at Analysys Mason was within the Custom Research team, developing project-based analysis for key industry clients. Tom’s experience includes leading numerous projects for telecoms service providers, vendors, and regulatory and industry bodies, as an analyst and consultant. Tom has degrees in mathematical and particle physics from the University of Nottingham and the University of Durham. Satvik Singhania (Research Analyst) joined Analysys Mason in 2012 as a Research Analyst in the Singapore office and works on our Asia–Pacific research programme. He has taken part in and led a number of key research projects as well as been involved in examining and forecasting the overall size of the telecoms market in developed and developing Asia–Pacific and producing market reports for various Asian countries. Before joining Analysys Mason, Satvik was a strategy and risk management consultant at Dragonfly, where he oversaw a number of projects in alternative energy investments for an oil major. Satvik has a degree in Economics and Finance from the Singapore Management University.

37 About Analysys Mason Consulting ResearchKnowing what’s going on is one thing. Understanding how to take advantage of events is quite another. Our ability to understand the complex workings of telecoms, media and technology (TMT) industries and draw practical conclusions, based on the specialist knowledge of our people, is what sets Analysys Mason apart. We deliver our key services via two channels: consulting and research. Consulting Our focus is exclusively on TMT. We support multi-billion dollar investments, advise clients on regulatory matters, provide spectrum valuation and auction support, and advise on operational performance, business planning and strategy. We have developed rigorous methodologies that deliver tangible results for clients around the world. For more information, please visit Research We analyse, track and forecast the different services accessed by consumers and enterprises, as well as the software, infrastructure and technology delivering those services. Research clients benefit from regular and timely intelligence in addition to direct access to our team of expert analysts. Our dedicated Custom Research team undertakes specialised and bespoke projects for clients. For more information, please visit

38 Research from Analysys MasonWe provide dedicated coverage of developments in the telecoms, media and technology (TMT) sectors, through a range of research programmes that focus on different services and regions of the world. Network Technologies Spectrum Fixed Networks Wireless Networks Practices Programmes Consumer Services Fixed Broadband and Media Mobile Broadband and Devices Mobile Content and Applications Voice and Messaging Enterprise Services Enterprise SME Strategies Telecoms Software Strategies Data programmes Application programmes Telecoms Software Forecasts Service Assurance Telecoms Software Market Shares Revenue Management Infrastructure Solutions Service Fulfilment Service Delivery Platforms Customer Care MEA APAC Regional Markets Europe European Core Forecasts Telecoms Market Matrix European Country Reports The Middle East and Africa Asia–Pacific Global Telecoms Forecasts Telecoms Software Markets Customer Experience Management Software Strategies Digital Economy Software Strategies Analytics Software Strategies Software-Controlled Networking CSP IT Strategies Alongside our standardised suite of research programmes, our Custom Research team undertakes specialised, bespoke research projects for clients. The dedicated team offers tailored investigations and answers complex questions on markets, competitors and services with customised industry intelligence and insights. To find out more, please visit

39 Consulting from Analysys MasonFor more than 25 years, our consultants have been bringing the benefits of applied intelligence to enable clients around the world to make the most of their opportunities. Our clients in the telecoms, media and technology (TMT) sectors operate in dynamic markets where change is constant. We help shape their understanding of the future so they can thrive in these demanding conditions. To do that, we have developed rigorous methodologies that deliver real results for clients around the world. Our focus is exclusively on TMT. We advise clients on regulatory matters, help shape spectrum policy and develop spectrum strategy, support multi-billion dollar investments, advise on operational performance and develop new business strategies. Such projects result in a depth of knowledge and a range of expertise that sets us apart. We help clients solve their most pressing problems, enabling them to go farther, faster and achieve their commercial objectives. To find out more, please visit

40