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1 Feb 2005

Industry

Telecommunications Industry: Outlook for 2005

In 2004, the telecom industry saw some significant changes. Among them were the establishment of the National Telecommunications Commission (NTC) in late August. Although the national economy last year was plagued with numerous negative factors, the telecom business was less affected than other industries and is poised to continue its growth. However, Kasikorn Research Center (KRC) forecasts that some telecom services will see decelerating growth. In summary:

1. Fixed-line telephones The number of fixed line telephones rose modestly despite expansion in the real estate sector and the national economy. This could be attributable to growth in mobile phones and reductions in mobile phone service fees that are significantly lower than that of fixed-line telephones, not to mention cellphone convenience. Looking ahead, KRC projects that fixed-line telephone service in 2005 will grow merely 2-3 percent, year-on-year, with a total of 7 million numbers; this modest growth being blamed on the expansion of cellular service. Even so, growth in fixed-line phone service will come from its related services such as the Internet that is being developed into broadband and other services to compete with those of mobile phones and boost income per number.

2. Mobile phones In 2004, the number of cellular phone users grew steadily. KRC estimates that in 2004 mobile phone subscribers will total some 27.5 million, rising around 24 percent over the year before. In 2005, active mobile numbers will increase to 32 million numbers, increasing some 16 percent, year-on-year, or representing 52 percent of the country's population. Despite the decelerating growth in active numbers, it is nevertheless comparatively much higher than the national growth.

3. Internet service KRC estimates that in 2004 the number of Internet users will total around 7 million, accounting for around 11 percent of the entire population in 2004 due to many supportive factors in falling service fees, greater use of Internet by business organizations, and the state sector support for the use of the Internet in their e-government project. Concerning the trend for Internet service in 2005, KRC forecasts that competition in the market for Internet service providers will still be high, despite a trend where utilization has increased by around 20 percent, and a total of 8.2 million of Internet users.

Regarding movements in communications business in 2005, KRC views that some kinds of communications services are expected to grow slower, such as mobile phones and fixed-line phone services. Meanwhile, Internet service is expected to gain more popularity, particularly broadband service, whose growth has been rather high, resulting from the positive factor dramatically falling service fees. In addition, directions in this business may still change as a result of the establishment of the NTC that will have the role toward defining regulations and competition in business, as well as their role in communications projects such as the CAT CDMA mobile phone expansion project, and the project to add 560,000 fixed-line phone numbers, which will cause higher competition in the market.

KRC is of the opinion that communications services that are concentrated mostly in the Bangkok Metropolitan Area will cause the need for expansion into regional services upcountry in order to increase customer bases there. Meanwhile, the market in Bangkok still has some potential for new services that can respond to the needs and lifestyles that rely on technology to enhance convenience in users' daily lives.

Industry