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Caribbean EVDO & CDMA Roaming Market: Potential Revenue: 2004 – 2010

Caribbean EVDO & CDMA Roaming Market: Potential Revenue: 2004 – 2010. Prepared by: Signals Telecom Consulting 1172 South Dixie Highway 447 Coral Gables, FL 33146. Prepared for: 701 Waterford Way, St. 430 Miami, FL 33126. Table of Contents. Methodology Caribbean EVDO Revenues

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Caribbean EVDO & CDMA Roaming Market: Potential Revenue: 2004 – 2010

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  1. Caribbean EVDO & CDMA Roaming Market:Potential Revenue: 2004 – 2010 Prepared by: Signals Telecom Consulting 1172 South Dixie Highway 447 Coral Gables, FL 33146 Prepared for: 701 Waterford Way, St. 430 Miami, FL 33126

  2. Table of Contents • Methodology • Caribbean EVDO Revenues • Caribbean CDMA Roaming Revenues • Target Operators for CDMA Network Deployment • Country Profiles • Anguilla Antigua & Barbuda Aruba • Bahamas Barbados British Virgin Islands • Cayman Islands French Antilles French Guiana • Grenada Honduras Netherlands Antilles • St. Kitts & Nevis Saint Lucia St. Vincent & the Grenadines • Trinidad & Tobago Turks & Caicos

  3. Assumptions There is no significant difference for the retail price of a voice minute between CDMA roaming and GSM roaming. Prices for SMS are identical for both technologies. To this end, the current roaming rates offered to GSM operators were used to determine the potential revenue of CDMA roaming. For this model Signals has built in the premise that Business MoU does not change significantly from one travel location to another. Thus, business consumer usage patterns would be identical to those at the consumers’ country of origin. Signals decided to decrease the reported MoU by 30% – 35% in order to counter balanced exaggerated figures from operators and to provide a conservative but credible estimation of the market’s CDMA roaming. Technologies market shares in the country of origin were used to determine the type of technology used by the roamer. Preferential agreements, pan-Caribbean presence and spectrum frequency band were used to determine the potential addressable market for GSM roaming and to better allocate GSM roaming revenues among the various service providers of the respective country.

  4. EVDO Revenues

  5. EVDO Revenues While potential EVDO revenues grow 620% from 2005 – 2010, EVDO Internet access revenues still represents a small segment of the total broadband market. EVDP revenues would grow to account for only 5,1% of the total broadband revenues. Potential EVDO revenues from new CDMA networks in the Caribbean basin would provide a strategic and growing revenue stream for regional operators, increasing in importance from 2,6% of total CDMA revenues to 14,8%. While CDMA revenue streams are often dependent on tourism market variables, technology migration and price competition, EVDO provides operators with a steady and growing line of revenue to counter variations in other services. Despite variations in GDP per capita and broadband service penetration, total EVDO revenues are most prominent in countries with higher populations: Bahamas, Barbados, the French Antilles, Honduras and Trinidad & Tobago.

  6. CDMA Roaming Revenues

  7. CDMA Roaming Revenues Key potential CDMA roaming markets include Aruba, Bahamas, Honduras, Cayman Islands and the British Virgin Islands, which together account for US$68.4 millions in 2010, or 71% of All CDMA Revenues Due to solid business traveler volumes from the US, Canada and Central America, Aruba, the Bahamas, Honduras, St. Vincent & the Grenadines and Turks & Caicos could potentially generate US$13,9 million in total roaming fees in 2010 While intensive data usage is not likely for vacationers, image and location based services are well positioned to stimulate future growth. Due to the expected growth in CDMA market share of US mobile subscribers through 2010, the potential CDMA roaming revenues will grow from 45,2% of all US roaming revenues in the region in 2005 to 51,3% in 2010. Business travelers are small but vital Segment of US CDMA roaming revenues. While representing only 4,6% of all travelers, business users generate 18,7% of all Caribbean basin CDMA roaming revenues

  8. Target Mobile Operators • Main target for deployment of CDMA network for roaming and/or EVDO should be incumbent operators: • Most challenged by the arrival of competition at the hands of pan-Caribbean operators such as Cingular Wireless & Digicel • Lack of large quantities of GSM 850 MHz-enabled handsets limits the ability of these networks of capturing roaming revenues • New entrants to mobile arena • Could use CDMA roaming as a additional “captive” revenue to speed-up the operator’s ROI • Could leverage CDMA network to provide WLL services • ILECs, ISPs, CATVs

  9. Anguilla Population: 13.008 (July 2004) Area: 102 Km2 Political Status: UK Overseas Territory Language: English Cable & Wireless is currently the only mobile operator offering GSM services in 850 MHz. C&W expected to launch 1900 MHz GSM services by year-end 2005 but facing delays. Cingular Wireless scheduled to launch services by year-end 2005.

  10. Anguilla Canada & US provide 56% of all incoming visitors 16% of visitors originate in countries with GSM at 900/1800 MHz 56,7% of travelers arrive on cruise ships for 8-12 hours visit Business travelers comprise 2,7% of total visitors

  11. Anguilla

  12. Anguilla CDMA roaming revenues are estimated to increase from 28,8% of total revenues for potential roaming in 2004 to 33,9% in 2010. Potential EVDO revenues are not significant during the 2004 – 2010 timeframe. 57% of the potential GSM roaming was originated by European subscribers who use mobile networks operating on the 900 MHz & 1800 MHz in 2004. This is expected to decrease in the subsequent year and only account for 50% of total GSM roaming by 2010. Unless these travelers use a tri-band handset they wont be able to do roaming in the island. The deployment by Cable & Wireless of a 1900 GSM network will allow the company to be able to increase its GSM roaming target market to reach all the non-European travelers or about 50% of all GSM-based roaming by 2010. Cingular Wireless arrival will have a direct impact on Cable & Wireless roaming market leaving the incumbent operator with a potential market of around 32% of all GSM-based roaming during the 2005 – 2010 years, lower than the potential CDMA roaming revenues for the same period.

  13. Antigua & Barbuda Population: 68.320 (July 2004) Area: 443 Km2 Political Status: Commonwealth Nation Language: English Three operators offering mobile services: APUA PCS (GSM 1900 MHz), Cingular Wireless (GSM 900 MHz) and Cable & Wireless (GSM 850 MHz) Digicel tried to enter the market by acquiring APUA PCS. Faced corruption allegations in October 2004.

  14. Antigua & Barbuda Canada & US provide 36% of all incoming visitors 41% of visitors originate in countries with GSM at 900/1800 MHz. 35% of visitors originate in the UK. 67% of travelers arrive on cruise ships for 8-12 hours visit and 87% of overnight visitors arrive by air. At US$1,65 per minute, the country has one of the lowest voice roaming rates for US visitors.

  15. Antigua & Barbuda

  16. Antigua & Barbuda Potential EVDO revenues could represent 14%, US$292.770, of the total CDMA roaming revenue by 2010, representing a 56,2% CAGR from estimated revenues of US$31.424 at year-end 2005. Furthermore, this represents 6,1% market share of the forecasted total broadband revenues, US$4.795.582, for 2010. The arrival of Digicel into the market through the acquisition of APUA PCS combined with an overlay by the deployment of a GSM 1900 MHz network by Cingular Wireless will have a drastic impact on Cable & Wireless GSM roaming revenues as its potential addressable market could be diminished by 2010 to only 6,15%, US$712.448, of all GSM-based travelers arriving from the Canada, Europe and the US. The total share of potential CDMA roaming revenues will steadily increase during the next five years to represent around 18,71%, US$2.167.673, of the total GSM voice revenues by 2010. However, CDMA-based SMS is expected to represent 28,95%, US$124.023, of the total GSM SMS revenues during the same period.

  17. Aruba Population: 71.218 (July 2004) Area: 193 Km2 Political Status: Dutch Overseas Dept. Language: Dutch & Papiamento Two operators offering mobile services: SETAR GSM (GSM 900/1800/1900 MHz) and Digicel (GSM 900/1800 MHz). Although Cingular Wireless has not mentioned Aruba on its expansion plans for 2005 the island fits into the pan-Caribbean operator regional strategy.

  18. Aruba Canada & US provide 68% of all incoming visitors; 58% of these visitors stay overnight. 99% of all overnight visitors arrive by air with 4,36% being business travelers. 13% of visitors originate in countries with GSM at 900/1800 MHz. The Netherlands holds the largest share of this group as it provides 8,6% of the total visitors to Aruba. Curacao provides 1,63% of the total visitors to Aruba.

  19. Aruba

  20. Aruba Boasts one of the highest GDP per capita of the Caribbean (US$28.000) which combined with its highly developed telecom infrastructure providing attractive growth potential for EVDO-based broadband services. Potential EVDO revenue is expected to experience a 60 CAGR during the 2005 – 2010 period, increasing from US$86.418 to US$905.621. Potential CDMA roaming will constitute 38,75% of all the roaming revenues by year-end 2010. This signifies a steady market share increase for CDMA roaming as it’s forecasted to constitute 33,3% of all roaming revenues by year-end 2005. Digicel roaming revenues will be negatively impacted during the 2005 – 2010 period as European originated roaming revenues will decline from representing 29,9% of total roaming in 2005, US$8.199.856, to constitute only 23,48%, US$7.579.769, by year-end 2010. The operator’s potential roaming revenues are negatively impacted by the operators inability to target around 38 – 45% on GSM-based roaming customers due to spectrum bands differences; the remaining 55% to 62% of GSM-based roamers will be shared with local incumbent SETAR GSM.

  21. Bahamas Population: 299.697 (July 2004) Area: 13.940 Km2 Political Status: Commonwealth Nation Language: English Telecommunications market still is a monopoly in most services. Privatization and liberalization efforts have failed. Mobile incumbent Batelco launched GSM 1900 MHz in February 2004, but coverage needs to improve to reach the same level of service of the old TDMA network Digicel & Cingular Wireless interested in entering the market

  22. Bahamas One of the most attractive roaming markets in the Caribbean with more than 4.5 million annual visitors. 87% of all the travelers visiting the Bahamas arrive from the US and 4% from Canada. Meanwhile, only 6% of visitors originate in countries with GSM at 900/1800 MHz. 69% of all visitors arrive by cruise ships for a 8 – 12 hours stay. Business travelers represent 2,76% of all visitors; and 33% of visitors stay overnight.

  23. Bahamas

  24. Bahamas Bahamas is one the most attractive market for CDMA roaming in the Caribbean due to the large numbers of visitors arriving from the US and Canada. Potential CDMA roaming constituted 41,86%, US$28.879.886, of the total roaming revenues for year-end 2004. This market share is forecasted to increase to 45,48%, US$37.828.289, by year-end 2010. High Internet penetration rates provide excellent growth opportunity for EVDO services which could grow from US$189.315, or less than 1% of the total broadband revenues in 2005, to represent a 6.12% share of the market’s total broadband revenues with US$1.983.929 by year-end 2010. Batelco’s GSM network in 1900 MHz prevents the operator from capitalizing on the European-based roamers visiting the islands. Nevertheless, this represents only 10% to 13% of all roaming revenues. Furthermore, the imminent liberalization of the mobile market will open the door for pan-Caribbean players such as Digicel and Cingular Wireless to enter the market and cannibalize in Batelco’s nascent GSM roaming business as these two operators do not operate CDMA networks.

  25. Barbados Population: 278.289 (July 2004) Area: 431 Km2 Political Status: Commonwealth Nation Language: English Barbados has one of the most competitive mobile markets in the Eastern Caribbean with three players offering commercial service: Cable & Wireless (GSM 1900 MHz), Digicel (GSM 900/1800 MHz), and Cingular Wireless (GSM 900/1900 MHz). 4th mobile licensee, Sunbeach Communications, wont be able to launch mobile services due to financial troubles.

  26. Barbados 10% of all travelers arrive from three Caribbean countries: Trinidad & Tobago, St. Lucia and St. Vincent & the Grenadines 45% of all the travelers visiting Barbados arrive from countries with GSM at 900/1800 MHz. Compared to other Caribbean markets a high percentage, 52,28%, of all visitors to Barbados stay overnight. Business travelers represent 5,96% of all visitors.

  27. Barbados

  28. Barbados Barbados is the seventh largest potential market for CDMA roaming and EVDO services in the Caribbean as a result of solid tourism originating from the US and Canada. Potential CDMA roaming constituted 98,3%, US$6.391.520, of the total roaming and EVDO revenues for year-end 2004. Total CDMA Roaming (US & Canada) and EVDO revenues are forecasted to increase to US$8.209.111, by year-end 2010. High Internet penetration rates provide excellent growth opportunity for EVDO services which could grow from US$110.409, or 0,9% of the total broadband revenues in 2005, to represent a 6,11% share of the market’s total broadband revenues with US$1.028.662 by year-end 2010. Cable & Wireless is the mobile operator that least benefits from GSM roaming due to its spectrum allocation since Europe-based roamers constitute 87%, US$34.137.651, of total revenues in 2004. Although the roaming generated by European-based travelers will decrease to 81%, US$30.798.468, preferential roaming agreements of its competitors decrease C&W’s potential addressable roaming revenues market share from GSM visitors from Canada, Europe, and the US to 11,24% by 2010.

  29. British Virgin Islands Population: 22.187 (July 2004) Area: 153Km2 Political Status: UK Overseas Territory Language: English Telecommunications market still is a monopoly with operator CCT Boatphone being the sole provider of mobile services currently offering TDMA services but doing a deployment of GSM 900/1900 MHz is undergoing. Roaming services are offered through PARC alliance on TDMA, the operator is seeking to start offering GSM roaming.

  30. British Virgin Islands 78% of all the travelers visiting the British Virgin Islands arrive from the US and 3% from Canada. Only 11% of visitors originate in countries with GSM at 900/1800 MHz. 65,8% of all Caribbean visitors arrive from Puerto Rico. Business travelers represent 1% of all visitors; and 57,5% of visitors stay overnight. Barbados

  31. British Virgin Islands

  32. British Virgin Islands Potential EVDO revenues of US$214.601 could represent 3,3% of the total CDMA roaming revenue by 2010, growing from an estimated revenues of US$31.424 at year-end 2005. Furthermore, this represents 6,1% market share of the forecasted total broadband revenues, US$3,5 million, for 2010. US CDMA potential roaming revenues are estimated to increase from the 2004 level of US$4.349.242 to US$5.925.179 in 2010. Canadian CDMA roaming traffic is expected to generate US$359,291 in 2010. The total share of potential CDMA roaming revenues will steadily increase during the next five years to represent around 40,5%, US$6.298.519, of the total roaming (CDMA and GSM) voice revenues by 2010. In the same period, CDMA-based SMS is expected to represent 42,9%, US$297.601, of the total SMS revenues by year-end 2010. Although CCT Boatphone is expected to launch GSM 900/1900 MHz services, the arrival of new entrants like Cingular Wireless or Digicel will prevent the operator from capturing most of the GSM-based roaming originated by travelers.

  33. Cayman Islands Population: 43.103 (July 2004) Area: 262 Km2 Political Status: UK Overseas Territory Language: English Considered one of the most important and competitive markets in the Eastern Caribbean Cayman Islands has three mobile operators offering service: Cable & Wireless (GSM 850/1900 MHz), Digicel (GSM 900/1800 MHz) and Cingular Wireless (GSM 850/1900 MHz). 4th mobile licensee TWTC is not expected to launch services in the foreseeable future as the investors are betting to their success in their Guyana operation, Cel*Star.

  34. Cayman Islands 79% of all the travelers visiting the Cayman Islands arrive from the US and 5% from Canada. 85,98% of all Caribbean visitors arrive from Jamaica; 70,38% of all European visitors arrive from the UK. Only 7% of visitors originate in countries with GSM at 900/1800 MHz. Business travelers represent 4,5% of all visitors; 86% of all visitors arrive on cruise ships.

  35. Cayman Islands

  36. Cayman Islands US and Canadian travelers comprise 84% of all tourism in the Cayman Islands, helping to generate an estimated US$19.722.956 in total roaming (CDMA & GSM) revenues in 2004, increasing to US$23.748.944 in 2010. In the period, CDMA voice and messaging revenues will reach US$10.721.936, accounting for 45,1% of total revenues. 72,6% of the potential GSM roaming was originated by US subscribers who use mobile networks operating on the 850 MHz & 1900 MHz in 2004. This is expected to stay steady, increasing in subsequent years and account for 74,6% of GSM roaming by 2010. However, the arrival of Digicel and Cingular Wireless is having a negative impact on Cable & Wireless GSM roaming revenues as its potential addressable market could be diminished by 2010 to only 32,67%, US$4.256.285, of all GSM-based travelers arriving from the Canada, Europe and the US. With the highest GDP per capita (US$35.000) in the region, the Cayman Islands represent a solid potential market for EVDO services, with total revenues expected to reach US$409.603 by 2010. EVDO spending per capita in the Cayman Islands is projected to be US$11,29, well above the regional average of US$4,49.

  37. French Antilles Population: 874.025 (July 2004) Area: 2.880 Km2 Political Status: France Overseas Dept. Language: French Martinique & Guadeloupe have two main operators Orange Caraibes (GSM 900 MHz) and Bouygues Telecom (GSM 900 MHz). Cingular Wireless is expected to launch services in both islands during 2005 (GSM 1800 MHz) Dauphin Telecom (GSM 900/1800 MHz) operates in St. Martin and will launch in St. Barts on 2005 under the Amigo GSM brand.

  38. French Antilles 80% of visitors originate in countries with GSM at 900/1800 MHz; 95% of these travelers arrive from France. 10% of all the travelers visiting the French Antilles arrive from the US and Canada. Not considering St. Barts or St. Martin, Guadeloupe receives 47% of the total visitors to the French West Indies or 88% of the total visitors to Martinique. 34,2% of all visitors arrive on cruise ships.

  39. French Antilles

  40. French Antilles With 80% of tourism originating from European countries, the vast majority (96%) of all roaming service revenues are GSM based. In 2004, roaming revenues in the French Antilles were estimated to be US$166.706.140, which is expected to decline slightly to US$153.600.345 in 2010, due primarily to price competition for roaming rates. During this period, messaging revenues are expected to increase from US$1.596.240 in 2004 to US$4.595.103 in 2010. Total roaming services and EVDO revenues are expected to reach US$8.912.682 by 2010. The total share of potential CDMA roaming revenues will steadily increase during the next five years to represent around 3,9%, or US$6.024.133, of the total roaming revenues by 2010. The French Antilles boast a potential EVDO market of US$310.036 in 2005 with prospects for revenues reaching US$2.888.550 in 2010. While this total ranks as the 3rd largest potential EVDO market in the region, due to an average GDP per capita and infrastructure concerns, the French Antilles are expected to have an average EVDO spending of US$3,42, well below the regional average.

  41. French Guiana Population: 191.309 (July 2004) Area: 91.000 Km2 Political Status: France Overseas Dept. Language: French Telecommunications market is open to competition with Orange Caraibes (GSM 900) and Bouygues Telecom (GSM 900) offering mobile services. The arrival of a potential new entrant is plausible as the French regulator, ART, recently granted licenses in other Caribbean dependencies. TWTC seems to be the most likely candidate as it wants to do a Pan-Guyana network.

  42. French Guiana 69% of all the travelers visiting French Guiana arrive from countries with GSM at 900/1800 MHz. US travelers only comprise 4% of the total amount of visitors. Lack of cruise ships routes docking in the country limits the total number of annual visitors. However, 99,99% of all travelers stay overnight.

  43. French Guiana

  44. French Guiana With one of the lowest GDPs per capita of the Caribbean (US$6.000) and a still developing infrastructure, French Guiana is among the least attractive of potential EVDO markets. Broadband services are expected to generate US$2.101.657 in 2004, improving to US$3.168.427 in 2010. Potential EVDO revenue is expected to increase from US$21.987 in 2005 to US$142.896 in 2010. Of the Caribbean basin countries included in this study, French Guiana is ranked last in total CDMA roaming and EVDO revenue potential. Total CDMA-based revenues are expected to total US$98.826 in 2005, increasing to US$237.344 in 2010, primarily due to the potential market for EVDO services. GSM-based roaming services comprise 98,5% of all roaming revenues in French Guiana. Total GSM roaming revenues are expected to decline from US$7.246.286 in 2004, to US$6.512.625 in 2010, due primarily to increased price competition among European operators. European GSM tourism accounts for 98,6% of all GSM revenues in French Guiana.

  45. Grenada Population: 89.357 (July 2004) Area: 344 Km2 Political Status: Commonwealth Nation Language: English Telecommunications market is highly competitive with three operators offering mobile services: Cable & Wireless (GSM 850), Digicel (GSM 900/1800 MHz) and Cingular Wireless (GSM 900/1900 MHz). Cable & Wireless is currently doing a GSM 1900 MHz deployment to increase its share of the GSM-based roaming revenues.

  46. Grenada 30% of all the travelers visiting Grenada arrive from countries with GSM at 900/1800 MHz; travelers arriving from Canada and the US constitute 29% of all visitors. Compared to other Caribbean markets a high percentage, 48,3%, of all visitors stay overnight. Business travelers represent 7,48% of all visitors. 45,58% of all visitors arrive by air into Grenada.

  47. Grenada

  48. Grenada Total CDMA roaming and EVDO revenues are estimated to increase from US$1.284.095 of in 2004 to US1.655.090 in 2010. Potential EVDO revenues in this period improve from US$27.210 to US$176.840, representing 4,5% of total broadband revenues expected by 2010. Per capita spending on EVDO services in 2010 is estimated at US$1,77, well below the regional average of US$4,49. 82,2% of potential GSM roaming revenues are expected to be originated by European subscribers who use mobile networks operating on the 900 MHz & 1800 MHz in 2004. This is expected to decrease in the subsequent years and only account for 76,9% of total GSM roaming by 2010, as US and Canadian GSM users will increase in this period. Furthermore, Cable & Wireless is the mobile operator that least benefits from GSM roaming due to its spectrum and preferential roaming agreements of its competitors decrease C&W’s potential addressable GSM roaming market of visitors from Canada, Europe, and the US to 9,59%, US$601.294, by 2010. CDMA roaming revenues will account for 22,5% of all roaming revenues by 2010. Of this volume, voice revenues will reach US$1.767.791, generating 97,1% of all CDMA-based revenues, with Messaging earning US$52.290, or 2,9% of the total.

  49. Honduras Population: 6.823.568 (July 2004) Area: 112.090 Km2 Political Status: Constitutional Republic Language: Spanish Mobile competition arrived recently to Honduras, the country has two commercial mobile operators: Celtel (GSM 850 MHz), Megatel (GSM 1900 MHz). Celtel decided to migrate its cdmaOne network and launched GSM services in August 2004. 3rd licensee, Hondutel, is expected to launch GSM 1900 MHz service in 2005.

  50. Honduras 54% of all travelers arrive from three Central American countries: El Salvador, Guatemala and Nicaragua 8% of all the travelers visiting Honduras arrive from countries with GSM at 900/1800 MHz; 27% of travelers arrive from Canada and the US Business travelers represent 10,53% of all visitors; 81,84% of all visitors stay overnight 22,91% of all travelers arrive on cruise ships.

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