China will surpass Japan in 2014 to become largest telecom services market in Asia, says Pyramid Research

Fueled by mobile penetration into the rural market and by uptake of 3G services, China's telecommunications market will generate US$187 billion by 2014, surpassing Japan to become the largest telecommunications services market in Asia, according to Pyramid Research.

China's telecommunications market generated US$110 billion in 2008, making it the second largest telecommunications services market in Asia/Pacific after Japan, noted Daniel Yu, analyst at Pyramid Research. "Given continued demand for connectivity and rising adoption of mobile and fixed broadband services, the China market will increase at a CAGR of 8.8% between 2009 and 2014, reaching US$187 billion by 2014, surpassing Japan as the largest telecommunications services market in Asia," Yu says.

"China, like many emerging markets, is becoming an increasingly mobile market, adding 71.2 million mobile subscriptions in 2008, roughly 12% of all additions worldwide and second only to India's 113.3 million net additions," said Yu. Mobile service revenue growth will be supported by a penetration increase from 58% at year-end 2009 to 80% at year-end 2014. Pyramid expects mobile services to account for more than 76% of total services revenues in China by 2014.

Despite the declining rate of growth in the economy, Pyramid Research said it expects the mobile industry to experience healthy growth in 2009 as mobile operators roll out 3G networks and extend coverage to rural areas. "China Mobile, for example, is dedicating 30% of its total capex on 2G network expansion, and 70% of the allocated portion will be used in the rural market," Yu said.

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