Insight 14: Limited Impact on Mobile Communications in Developing Countries By the end of 2008, the economic crisis had
compared to 10.1 million in September 2008.93 In
yet to impact growth in mobile in the largest
Nigeria, the number of new mobile subscribers has
developing country markets. The tightening of
increased every quarter to September 2008,94 while
credit has threatened capex and investment in
Brazil added four million mobile subscribers in
telecom networks, but this impact is so far limited
October 2008, over twice as many as in October
mainly to developed countries. It might spread to
2007.95
developing countries, especially those reliant on FDI from developed nations for financing network
In some respects, the economic crisis could not
roll-out. Developing country mobile operators
have come at a better time for developing coun-
controlled by European or North American
tries in respect to mobile communications. Rapid
carriers could be most affected. However, the
growth has dramatically increased the penetration
overall outlook for developing countries is for
of mobile phones, even in the poorest countries.
continuing strong demand for mobile services.
Towards the end of 2008, almost one out of every two persons in developing countries already had
According to the latest data, growth continues
a mobile phone. Less than a dozen developing
unabated in the largest developing mobile markets.
nations have a mobile penetration of less than ten
The world’s biggest mobile operator, China
(compared to some two dozen where penetration
Mobile, added 74 million mobile subscribers
is already over 100).
in the year to October 2008 (compared with 92
76
‘only’ 55 million from January-October 2007). In
In most of the developing countries with a mobile
India, which surpassed the US in 2008 to become
penetration less than ten, restrictive government
the world’s second-largest mobile market, 10.4
telecommunications policies cause more harm
million subscribers were added in October 2008,
than any economic crisis could. Therefore, a key
challenge during this economic crisis will be as
growth in developing countries by creating jobs
much about sustaining those with mobile phones
and facilitating business99 and can thus help
as trying to ensure that infrastructure roll-out
countries overcome the impact of the crisis on
continues to pick up new subscribers.
other sectors.
The economic crisis could affect mobile
Governments can facilitate mobile phone owner-
subscribers in developing countries, if people
ship and continued infrastructure roll-out by en-
lose their jobs or see their incomes cut. However,
hancing competition, minimizing taxes and other
once a user gets a mobile phone, it is difficult
fees on mobile operators and making wireless spec-
to give up, and in many countries, mobiles
trum readily available. A fall in investment from
have become a necessity.96 Mobiles have largely
developed countries can be mitigated by greater
replaced fixed lines for voice communications in
‘South-South’ investment, domestic investment,
many developing nations.97 Therefore, other ICT
multilateral assistance or government support. The
services are likely to be dropped, with mobile only
real concern is that, in times of panic, the risks as-
being discontinued as a last resort.
sociated with infrastructure investment are overestimated and credit dries up. It would be irrational
Developing countries are home to the so-called
to divert investment, since mobile is a healthy
“next billion mobile subscribers” so it makes
sector that can help sustain economic growth.
98
sound financial sense to support the mobile sector. Manufacturers and strategic investors are not
Source: Michael Minges, Senior Market Analyst, TMG Inc.
likely to slash investment in a market with such strong growth potential and untapped demand. In addition, mobile communications drives economic
Confronting the Crisis: Its Impact on the ICT Industry
77