RESEARCH STRATEGY REPORT CONVERGED FIXED MOBILE …

Converged fixed–mobile bundles in emerging markets: opportunities for growth

© Analysys Mason Limited 2018

RESEARCH STRATEGY REPORT

analysysmason.com

CONVERGED FIXED–MOBILE BUNDLES IN EMERGING

MARKETS: OPPORTUNITIES FOR GROWTH

STEPHEN WILSON



KEY QUESTIONS ANSWERED IN THIS REPORT WHO SHOULD READ THIS REPORT

GEOGRAPHICAL COVERAGE CASE STUDIES

▪ Central and Eastern Europe

(CEE)

▪ Emerging Asia–Pacific (EMAP)

▪ Latin America (LATAM)

▪ Middle East and North Africa

(MENA)

▪ China Mobile

▪ China Telecom

▪ China Unicom

▪ AIS (Thailand)

▪ True (Thailand)

▪ Veon (Confederation of

Independent States (CIS))

2

This report assesses the value that operators in emerging markets

might gain from offering fixed–mobile bundles and the impact that

this might have on the operators.

The report provides recommendations for fixed and/or mobile

operators in emerging markets that are examining fixed–mobile

bundles.

It is based on several sources:

▪ Analysys Mason’s research

▪ interviews with emerging market operators with an interest in

fixed–mobile bundles.

About this report

▪ How is the context of the launch of fixed–mobile bundles different in

emerging markets compared to that in developed markets?

▪ What are some of the best approaches for converged operators that are

considering how to most successfully design their fixed–mobile bundles?

▪ What impact have fixed–mobile bundles had on the operational and

financial KPIs of operators in emerging markets?

▪ How will the role of standalone fixed and mobile operators be affected by

the launch and availability of fixed–mobile bundles in emerging markets?

▪ Executives in strategy teams in converged operators in emerging

markets considering whether to launch fixed–mobile bundles and the

best possible approach for creating attractive converged offers.

▪ Executives in strategy teams in standalone fixed and mobile operators in

emerging markets assessing the potential impact of the growth of fixed–

mobile bundles in their markets and the value of offering both fixed and

mobile services.



CONTENTSCONTENTS

EXECUTIVE SUMMARY

FMC CONTEXT AND MOTIVATION IN EMERGING MARKETS

FMC TARIFF BEST PRACTICE

FMC IN CHINA, THAILAND AND THE CIS

APPENDIX

ABOUT THE AUTHOR AND ANALYSYS MASON

3



Figure 1: Potential impact of fixed–mobile bundles in emerging markets

4

Operators in emerging markets may be concerned about the

risks of revenue cannibalisation from launching fixed–mobile

bundles. However, converged bundles are popular in some

emerging markets and can help operators to increase their

share of revenue.

Operators in emerging markets must decide whether they wish to

offer both fixed and mobile services or continue to be standalone

players. Converged operators must then assess the value of

offering fixed–mobile bundles.

Many players stand to gain revenue market share from the launch

of such packages. Operators can choose what level of discounting

is appropriate compared with standalone offers, or if discounts

are necessary at all to attract subscribers.

This report recommends the following.

▪ Players with large fixed-line bases should consider offering

mobile services and using fixed–mobile bundles to increase

revenue market share.

▪ MNOs should use fixed–mobile bundles as a way of reducing

the churn of higher-value postpaid mobile customers and as a

way of attracting more of these customers.

▪ Converged operators should offer fixed–mobile bundles but

must also pay attention to other elements of their propositions.

Executive summary



Figure 2: Decision-making process for operators in emerging markets

5

Many operators in emerging markets understand the value of

offering both fixed and mobile services. Converged operators

must then take the decision on how to integrate their fixed and

mobile offers on a retail level.

Telekom Malaysia is a fixed-line operator that has entered the

mobile segment with its mobile arm webe. Equally, established

mobile operators have looked to diversify their revenue away from

the mobile segment, which has been stagnating in many emerging

markets, by offering fixed broadband access. Other emerging

market players, notably incumbents in some markets, have long

offered both fixed and mobile access.

All of these players must consider the value of offering fixed–

mobile bundles. If such bundles attract considerable interest this

will make life increasingly difficult for standalone fixed and mobile

operators. However, launching fixed–mobile bundles may involve

offering discounts and operators therefore may run the risk of

revenue cannibalisation. Operators must weigh up these risks

while establishing the potential value that such bundles could

offer, for instance, in terms of growing the number of higher-value

postpaid mobile subscribers. Converged operators must also

assess the value in incorporating extra features such as additional

SIMs into their fixed–mobile bundles.

Challenge: Operators in emerging markets may be concerned

that launching fixed–mobile bundles will cannibalise revenue



Figure 3: Fixed–mobile bundle-related opportunities in emerging markets

6

With the intelligent use of fixed–mobile bundles converged

operators stand to enjoy a significant competitive advantage

over their standalone counterparts.

Emerging market operators with both fixed and mobile arms must

consider the value of combining these propositions in fixed–

mobile bundles. In emerging markets, the presence of players with

both strong fixed and mobile arms is less common than in

developed markets, which reduces the risk of revenue

cannibalisation from the launch of fixed–mobile bundles. MNOs

with fixed-line operations must assess the risk of launching

converged offers and then seeing these copied by integrated

incumbents that have a strong fixed-line presence and may be in a

better position to attract consumers with converged offers.

In order to maximise the opportunities presented by fixed–mobile

bundles, converged operators must carefully design their

converged tariffs. In many cases, it will be appropriate for

operators to offer discounts compared with standalone

propositions. Operators can also maximise the benefits of fixed–

mobile bundles by adding extra features to these offers such as

multiple SIMs and shared data. Emerging market operators

seeking to benefit from launching fixed–mobile bundles must also

assess the lessons learnt from the launch of such bundles in

markets like China, Thailand and some CIS countries.

Solution: Fixed–mobile bundles will enable many converged

operators to increase revenue


© Analysys Mason Limited 2018 7

Recommendations

1Strong fixed-line players that are entering the mobile sector in emerging markets should offer fixed–mobile

bundles to boost revenue.

Operators that have a strong position in the fixed broadband market and are launching mobile services are well

positioned to use bundling to increase their mobile bases. Incumbents with strong positions in both fixed and

mobile markets (less common in emerging than developed markets) have the opportunity to consider offering

additional benefits rather than discounts as part of their fixed–mobile bundles.

2MNOs in emerging markets must consider entering the fixed-line market and offering fixed–mobile bundles.

Emerging market MNOs must consider launching fixed broadband propositions because revenue is increasing in

this sector. Launching fixed–mobile bundles can help to reduce churn of higher-value mobile customers and boost

the number of postpaid mobile customers. The position of standalone MNOs will become increasingly challenging

and such operators will lose overall and mobile market revenue market share.

3Converged operators must pay attention to other elements of their offers – not just fixed–mobile bundles – if

they are to attract subscribers.

Given the potential of fixed–mobile bundles, it might be tempting for converged operators to only focus on this

aspect of their propositions. However, these offerings are unlikely to guarantee success as both fixed and mobile

markets become increasingly competitive. Converged operators should dedicate considerable efforts to examining

the value of bundle features such as fixed broadband speeds, video propositions and other value-added services.



CONTENTSCONTENTS

EXECUTIVE SUMMARY

FMC CONTEXT AND MOTIVATION IN EMERGING MARKETS

FMC TARIFF BEST PRACTICE

FMC IN CHINA, THAILAND AND THE CIS

APPENDIX

ABOUT THE AUTHOR AND ANALYSYS MASON

27



About the author

Stephen Wilson (Principal Analyst) works across Analysys Mason’s Network Investment Strategies and Consumer Services practices. He is

based in Analysys Mason's Singapore office, from where he closely follows market developments in the Asia–Pacific region. Recent areas of

focus include how to accelerate a return on investment in FTTx deployments and how to drive prepaid to postpaid mobile migration. Stephen

has more than 10 years of experience in the telecoms sector and is a graduate in Philosophy, Politics and Economics from St Catherine's

College, Oxford University.



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FEBRUARY 2018

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RESEARCH STRATEGY REPORT CONVERGED FIXED MOBILE …