October 10, 2011
Demand for mobile broadband has been growing in markets around the world, which has spurred a number of operators to launch LTE networks. As of August 31, 26 operators had launched LTE-FDD networks by the GSA’s count, while 237 have begun investing in LTE.
However it’s three US operators — Verizon, MetroPCS, and AT&T — that will account for the majority of LTE connections globally by year-end 2011. We expect that the US, with 7m LTE connections, will account for 47% of the world’s LTE subscriptions. While Pyramid expects unit sales of LTE smartphones to top 5.4m in the US this year, 71% of global LTE handset sales will come from the US.
The strong demand for mobile broadband in the US will allow operators to quickly recoup spending on capital investments. Let’s look at Verizon and NTT Docomo – both are the largest operators in their respective countries, and both launched LTE in December 2010. Although Verizon’s LTE network will cover 60% of the population by year end, because the operator is pulling in so much revenue, capex only represented 14.7% of revenue over the past four quarters. By comparison, NTT Docomo will cover a mere 20% of the Japanese population with LTE by March 2012, even though capex represented a larger 15.8% of revenue in the year ending March 2011.
Verizon is much more aggressive in expanding its LTE device portfolio than NTT Docomo. While Verizon launched its first LTE handset (the HTC Thunderbolt) in March and now has five LTE handset models on offer, we don’t expect to see the first LTE handsets from NTT DOCOMO until early 2012.
Due to its high profit margins and its low capex/revenue ratio, Verizon has the means to move forward with LTE expansion much more quickly than its peers in other countries, which is how the US will end 2011 with the highest LTE adoption rates globally.
Comparison of leading operators in the US, Japan, and South Korea
Source: Pyramid Research
— Emily Smith, Analyst
United States: Operators Turn to Mobile Broadband for Growth Opportunities
Country Intelligence Report published September 2011
The US telecom market generated $367bn in service revenue in 2010, an increase of 3.1% over 2009. Burgeoning growth in mobile broadband, the relatively inelastic nature of demand for pay-TV and continued growth in fixed broadband will offset the ever-shrinking fixed circuit-switched market. We expect the market to grow at a 3.1% CAGR over 2011-2016, reaching $443bn in 2016. Mobile data will be the largest contributor to growth over the next five years.
Asia-Pacific to Be Global Leader in LTE
Asia-Pacific Telecom Insider published July 2011
Long-term evolution (LTE) has become the worldwide standard for next-generation mobile technology, and a handful of operators in Asia-Pacific will be on the forefront in its development and implementation. Through the combined pressure of demand-side and supply-side factors, LTE deployment is likely to eventually occur in all major markets in the region.