For years the huge markets of Brazil, Russia, India and China (the BRIC economies) have promised much and delivered little. Ongoing political and economic issues have held them back from realising their true potential in the global market. But is all that set to change?
This is evolution not revolution, and change will be progressive. Common characteristics to be found among the four markets include:
Low penetration rates for mobile, Internet, and fixed-line services, despite decades of foreign investment.
No 3G licences yet issued in any of these four markets - if the take-up of 3G elsewhere is anything to go by, 3G licensing should be hotly-contested.
Poorly-defined regulatory regimes have hindered the existing players, but careful analysis of market rules should allow the most savvy to survive.
Meanwhile, each market presents its own combination of challenges and opportunities:
China and India are emerging as equipment development and manufacturing power-houses, with leading vendors setting up shop to take advantage of highly-skilled low-cost employee base and access to key regional distribution hubs.
The Asian market - the Indochina subcontinent in particular - is very poorly served at the moment and will represent the focus for the next major industry expansion effort.
Russia is less attractive for manufacturers wishing to set up local facilities, but has good prospects for foreign companies wishing to sell to the emerging mobile and fixed-line operators.
Brazil is a more mature market - competing with Mexico and Argentina to become the major services and equipment manufacturing/distribution hub - but has shown strong growth in recent years as competition begins to bite.
The real opportunities lie in the future, where steady growth in BRIC markets will erode the commercial differences with the established markets of North America, Japan, and Europe.
Effective planning is vital, and impartial, thoroughly researched information is essential to fully appreciate the current status as a basis for future development. That is why International Telecoms Intelligence (ITI), the leading provider of market intelligence, has published the 330-page management Opportunities for Telecommunications Equipment & Services in the BRIC Economies. In addition to highly detailed chapters on each market, the report provides a thought-provoking and comparative examination of the BRIC economies, putting opportunities into their current and future context.
Following a comparative overview, the report provides for each country:
COUNTRY BACKGROUND Including economic, political and demographic data
TELECOM DATA Market size, growth & share for fixed, mobile, Internet, & Pay TV
MARKET OVERVIEW Opportunities In The Operating Environment Opportunities In The Equipment Supply/Manufacturing Environment
REGULATION Legislation and licensing for fixed and cellular networks and equipment
COMPETITION
PRIVATISATION
CONTACT DIRECTORY Operators, Manufacturers, Regulatory Authorities and Trade Associations
MARKET INDICATORS Fixed-line Market Operating Results, Lines in Service, Growth & Market Share Mobile Market Subscribers by Operator, Technology, Operator Band, Pay-TV Market Including Current Operators, Technology, Market Share Internet/Broadband Market Telecommunications Equipment Market, Size, Market Growth, Import/Export data (where available)
MAJOR OPERATORS Contact Details, Ownership, Networks, Revenues, Major Supply Contracts
MAJOR MANUFACTURERS Ownership, Facilities, Revenues, and Employees (where available)
TRADE ASSOCIATIONS Overview and remit
Analysis and detailed background data to save you time and effort assessing these key markets
China
India
That China is the biggest market for electronic communications services should not be surprising. The country has one of the largest populations in the world ? at approximately 1,300 million individuals at the end of 2004 ? and, thanks largely to state planning and state-owned duopolies in the fixed-line and wireless services market, has managed to increase fixed-line and mobile penetration with alacrity. Demand for advanced broadband and other Internet services is booming, despite the tight controls and censorship imposed by the state. China is also benefiting from technology partnerships between the state-owned equipment manufacturers/technology developers and almost all of the leading global players, such as Nokia, Marconi, Alcatel, Lucent Technologies, Cisco Systems, Ericsson, and Siemens. China?s own star players are now beginning to beat the foreigners at their own game, with Huawei Technologies, ZTE, Amoi Mobile, and Ningbo Bird winning substantial supply contracts at home and overseas.
At the end of 2004, there were some 316 million fixed-line telephone lines in service, primarily operated by the duopoly of China Telecom and China Netcom. An increasing number of lines are actually limited mobility accesses based on Japanese-developed technology, known as the Personal Handyphone System (PHS). The technology has proved especially useful in addressing the communications requirements of rural and isolated communities as well as in the major cities where it is difficult to install new lines and cables. Consequently, fixed-line penetration has risen from 11.4 per 100 population in 2000 to 24.3 per hundred in 2004.
China ?s mobile subscriber base overtook the fixed-line subscriber base in 2003 and is set to continue growing at a phenomenal rate, even before taking into consideration the likelihood that licences to operate commercial third-generation (3G) networks have yet to be issued. Indeed, there is as yet no firm timetable for the licensing of 3G operators, although most observers expect the licensing process to get underway within the next 15 months.
Like China, India has one of the largest populations in the world, at 1,077 million at the end of 2004. The country?s electronic communications services market was worth US$17,780 million in 2004, according to data recently published by the Telecom Regulatory Authority of India (TRAI); this represented a year-on-year increase of approximately 24% (precise figures not supplied). As such, it was the second-fastest growing market of the four reviewed here, having been overtaken by Russia in 2004.
The development of India?s telecommunications market has been implemented in accordance with a National Telecommunications Policy (NTP) introduced in 1994 and a New Telecommunications Policy introduced in 1999. Both provided guidelines for the liberalisation of India?s local fixed-line and regional cellular services market and, latterly, for the liberalisation of the domestic and international long-distance markets. However, the implementation and management of these policies has been somewhat haphazard, with a lack of clarity continuing to afflict basic regulatory policy to this day. For instance, private operators continue to be hit by amendments to tax laws, licensing fees, and tariff mechanisms, effectively allowing the state-owned incumbent operators Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) to maintain a dominant position in their respective markets. The third state-owned incumbent, Videsh Sanchar Nigam Ltd (VSNL, now part of the private Tata group), enjoyed the benefits of protectionism for many years.
This state of affairs drove away many of the foreign companies that had battled to invest in new Indian fixed-line and cellular operators from the mid-1990s onwards, and few notable foreign investors now remain, the most obvious example being Hong Kong?s Hutchison Whampoa.
Despite the considerable success achieved by alternative operators such as Bharti Tele-Ventures Ltd, Bharti Telenet, and Reliance Infocomm, fixed-line penetration remains very low in India, at around 4.2% at the end of 2004 and approximately 5.0% as of September 2005.
Russia
Brazil
With a total population of 145.2 million at the end of 2004, Russia represents another large and underserved market. As in China and India, the fixed-line market is dominated by the state-controlled utility, in this case the Svyazinvest holding company, which owns or controls more than 70 local telephone companies and the principal long-distance operator, Rostelecom. The ongoing process of restructuring Svyazinvest?s holdings ahead of a possible privatisation in 2005/06, as well as expansion and consolidation within the cellular sector, are thought likely to have contributed to the impressive 37.6% growth in the electronic communications services market in 2004, valued at US$18,300 million.
The emergence of a new breed of successful alternative service providers and network operators ? among them, the Sistema Telecom group, Corbina Telecom, Gars Telecom, Golden Telecom, PeterStar, and TransTelecom Company ? has also contributed to growth in the sector, characterised by a booming demand for broadband and corporate communications services.
Nevertheless, the penetration of basic telephone lines is relatively low, at around 28.8 lines per 100 people at the end of 2004. This disguises the fact that many rural areas and even small towns have little or no exposure to the national telecommunications system, whereas major cities such as Moscow and St Petersburg benefit from extensive and technologically well-advanced networks and therefore have a much higher penetration rate.
A number of telecommunications operators characterise the Russian market as being ?unsaturated? and have indicated their intention to continue investing heavily in networks and service provision for the foreseeable future. The liberalisation of the domestic long-distance market, currently scheduled for January 2006, should also provide an additional incentive for investment.
With a population of 182 million at the end of 2004, Brazil represents the third most populated market of the four countries under review. Despite relatively high rates of unemployment and variable degree of exposure to the economic and political turmoil that regularly blights the Latin American region, the country?s gross domestic product (GDP) has been showing an impressive rate of growth in the last three years, buoyed by commensurate growth in the electronic communications services market.
Using data obtained from Brazil?s largest fixed-line and mobile communications operators, ITI Reports estimates that Brazil?s electronic communications services market had been worth US$47,050 million in 2004, up by around 20% on the previous year. It is possible that the actual value of the market could be rather higher as a great many of the country?s numerous small value-added service providers, data carriers, and Internet service providers are reticent or tardy in disclosing operating and financial information.
According to the National Telecommunications Agency (Anatel), there were 37.19 million fixed access lines in service in Brazil at the end of 2004, down from 39.20 million in 2003 and 38.80 million in 2002. The decline in the number of fixed access lines is attributed to customer migration to alternative access media, such as mobile phones, ADSL, and VoIP connections. The five main incumbent local telephone companies ? TELESP, Telemar, Brasil Telecom, Sercomtel, CTBC Telecom ? account for the majority of fixed lines in service. They are being increasingly challenged by ?mirror? operators in each of their geographic markets and also by each other as they finally break free from the restrictions limiting them to their traditional service areas. Long-distance operator, Embratel, has also begun offering a local telephone service.
Don't waste time consulting other information sources that lack the insight, resources, contacts, experience, wealth of data and attention to detail that only ITI can provide
A new report that evaluates the real status, opportunities and threats for Telecoms companies in the BRIC economies.
Low penetration rates for mobile, Internet, and fixed-line services, despite decades of foreign investment. 