Telecom - after the downturn, telecoms markets are to grow in 2010

[zawya] After witnessing one of the worst downturns in 2009, the telecom markets will grow, albeit at a slower pace in 2010, a UK-based business intelligence provider said.

The growth of telecom markets in 2010 will be propelled by the sale of smartphones, Informa Telecoms and Media (ITM) said in its "Industry Outlook" for 2010.

The year 2010 will also force a rethink of the term "emerging markets" as mobile phone penetration in many such markets would match the figures of developed economies, ITM analysts said.

"For only the second time in history, the mobile handsets market is forecast to downturn in 2009. ITM predicts a year-on-year drop of 10 per cent in the sales of new mobile handsets to 1.07 billion in 2009 with a number of major vendors also predicting as much. Growth is expected to pick up in 2010, albeit at a slower rate than previously expected," ITM said in the report.

Handset sales will again hit 2008 levels in 2011, the analysts said. "Informa Telecoms believes that the handset sales will eventually return to 2008 levels in 2011, when year-on year growth of just under eight per cent is expected," they added.

In spite of the industry downturn, smartphones sales will continue to grow and are on track to pass sales of 200 million units in 2009, meaning that one in five of all handsets sold will have been a smart phone.

The sale of smartphones will rise 36 per cent in 2010 and such phones will occupy 27 per cent of the total handsets sold in 2010, the report said. "Sales of these devices will reach 33.5 per cent year-on-year growth in 2009 and 36 per cent in 2010. While smartphones will account for 27 per cent of total handsets sold in 2010, the value of this segment will exceed 55 per cent of the total mobile handsets market value."

ITM expects that in 2010, profits from smartphones will represent an impressive 64 per cent of the total mobile handsets markets profits.

A reduction in cost and rise in multimedia capabilities of smartphones will drive their sales, ITM said.

Deteriorating economic conditions caused by the global downturn, falling consumer index leading to end- users keeping their devices for six to nine months longer than in the past thus elongating the replacement cycle and mobile operators reducing subscription acquisition costs were cited as the prime reasons for a lackluster performance of the telecom sector in 2009.

ITM?said the impact of fall in the device markets will be more pronounced in the developed markets. This is because sales generated from replacement markets in these countries are a much larger proportion of total sales than in developing markets. All major countries and regions are forecast to see declines in device sales in 2009, with the exception of India. Major emerging markets long the engine of growth for device sales and subscription counts, are not expected to escape fall in sales, it said.

Handset sales in Asia Pacific, the world's largest market, will fall 7.2 per cent to $470 million (Dh1.72 billion) in 2009, accounting for 43.8 per cent of the global total. Although the Chinese market falls by 7.2 per cent in the year, the Indian market will continue growing; in 2009, India is set to overtake China as the country with the world's largest handset sales market, ITM said.

Europe is set to see the biggest fall in 2009 of 12.8 per cent with Latin America close behind with an expected drop of 12.7 per cent, ITM analysts said.

Device sales figures are expected to return to growth in 2010, with a worldwide average of 3.3 per cent. In 2010, North America is set to see the biggest year-on-year growth of 4.3 per cent ITM pointed out.

Telecom to grow, but at steadier pace in 2010