We estimate there were 28.917 mobile subscribers in Taiwan as of Q112, up by 0.7% quarter-on-quarter (q-o-q) and 4.0% year-on-year (y-o-y). Continued demand for smartphones is driving this growth and, while voice revenue is declining as a whole, operators are making up any shortfalls through increased data revenue. Behind market leader, Chunghwa Telecom, Taiwan Mobile and Far EasTone are in a tough battle for second place. Both posted a similar performance in Q112, with 76,000 net additions for Far EasTone and 72,000 for Taiwan Mobile, enabling both to take market share from Chunghwa Telecom. By Q112, Taiwan Mobile had just 41,000 more subscribers than its rival. After revisions to forecasts for mobile subscriber and ARPU growth in the previous report, we are making no further changes at this time.
However, there is potential for a rise in ARPU forecasts given the Q112 data. While Chungwha Telecom suffered another q-o-q fall in blended ARPU and a large y-o-y drop in Q112, its rivals both saw ARPU rise q-o-q and y-o-y. We currently forecast ARPU will show a gradual yo- y decline over the five-year forecast period, but if Taiwan Mobile and Far EasTone succeed in maintaining or even improving their Q112 ARPU levels, there is potential for the average annual blended ARPU rate for 2012 to increase, and forecasts to 2016 to be revised upwards. With mobile penetration at 123.5% at YE11, there is little room for growth in a highly saturated market and operators are instead focusing on upgrading their 2G subscribers to the higher value 3G subscriptions. Efforts are also being made to bolster their value-added services portfolio in order to encourage subscribers to use more data.
However, we expect subscriber numbers will continue to climb over the 2012-2016 timeframe and expect penetration to reach 135% by 2016. Prior to 2011, the Taiwanese fixed-line industry had been in long-term decline, which was in line with the global trend due to the rapidly increasing popularity of mobile alternatives. However, Taiwans National Communications Commission reported that the fixed-line industry experienced an unexpected – albeit slight – resurgence in March 2011. This was short-lived, as following a peak in subscriber numbers in May 2011, the subscriber base declined during the remaining months of the year.
This trend continued in Q112, with the number of fixed lines in service falling by 0.8% q-o-q and 2.1% y-o-y to 12.58mn. Over the course of our five-year forecast period, we believe that the long-term downtrend for the industry will continue because the falling demand for residential fixed-lines is outpacing the slower growth in business fixed lines. Consumers are switching to mobile services, as well as opting for alternatives like VoIP because of convenience, increasingly affordable services and improving quality. The fixed broadband segment exhibited robust growth in Q112, with 318,000 net additions, according to NCC data, compared with just 136,000 for 2011. If this trend continues we will revise our 2012 forecast in coming reports. As in the mobile sector, the overall broadband market is approaching saturation: penetration exceeded 100% in 2011, reflecting the effect of mobile broadband services on the market as internet users increasingly have fixed and mobile broadband subscriptions.
Although market growth is generally on a slowing trend, we envisage growth rates to remain robust in the next two to three years due to factors such as multiple device ownership. By 2016, we see broadband penetration exceeding 117%. Taiwan remained in sixth position in BMIs latest Risk/Reward Ratings although, after a slight improvement in the Q212 report, its overall Telecoms Rating again declined and is closer to seventhranked Malaysia than fifth-placed South Korea. The Industry Rewards score fell following downwards revisions to forecasts for mobile, fixed and broadband subscriber growth, as well as for mobile ARPU, in the Q112 report.
The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.