2011 census to shed new light on growth opportunities - Heads up on revised head counts in emerging markets

Dwelling on the most granular issues that the mobile industry is currently facing, there are often few deep dives into demographic trends. While stakeholders in saturated markets traditionally focus on the next 18 months, investors in emerging markets should not dismiss assessing expected growth prospects over the next 50 years.

In mature Western cellular markets, fertility and mortality rates as well as population migration are closely monitored, lending a certain degree of accuracy to demographic projections – and their comparability with cellular forecasts. However, in emerging markets such as Bangladesh, the situation is entirely different.

Bangladesh is the most densely populated country in the world (outside of the island states of Hong Kong and Singapore) with more than 920 people per square kilometre. It is twice the size of Germany and half that of the USA. Dhaka – its capital – is believed to be the fastest-growing city in the world, and the population exodus from rural areas to cities has been occurring at a tremendous pace. Yet, no-one knows for certain how many inhabitants – or potential cellular users – there are in Bangladesh.

Currently, the Bangladesh Bureau of Statistics puts the population at 150 million whilst the International Centre for Diarrhoeal Disease Research (which has a long track record in monitoring the country’s demographics) puts it at 162 million, closer to the United Nations Population Fund at 164 million. Some statisticians place the figure at over 165 million.

Furthermore, demographers continue to disagree on a timeframe for when the population will stabilise. The Bangladesh Population Policy of the Ministry of Health and Family Welfare last estimated that the population will stabilise at 210 million in 2060 whereas, in 2004, the UN estimated that Bangladesh would reach 243 million inhabitants by 2050 before revising it to 223 million in its latest publication of “The State of the Population” (2010).

Consequently, demographers imply that there is a population gap of around 15 million from 2010 through 2050 – which in the shoes of a mobile operator is quite considerable. Such a discrepancy is mainly attributable to differences in population sizing methodology and uncertainty about fertility rates. The initial predictions from the UN were likely based on fertility rates from the 2001 census which have since changed, triggered by the world’s most expensive fertility reduction programme. According to 2007 statistics, the total fertility rate for women aged 15-49 was 2.7, whereas it has been reported to have stagnated at around 2.5 in 2010 – some way above the government’s target of 2.2. Nevertheless, a five year delay in attaining replacement-level fertility only adds 3 percent to the population at any point in time.

Yet for any operator planning long-term network investments in Bangladesh, a potential 15 million population variation between now and 2050 is a significant gap which needs to be narrowed. The country had 73 million cellular connections in 2010, which gives a market penetration of 49 percent using the government’s statistics or 44 percent according to the UN. At present, GSMA Intelligence forecast that Bangladesh will hit 65 percent penetration in 2015 but depending on the results of the 2011 census and the updated projections associated with it, penetration rates are likely to be revised.

Such issues highlight that demographers have either underestimated or overestimated the prospect for population growth, which in turns potentially means that the prospect for cellular growth could be higher than expected. As a matter of fact, the revised population figures could translate into a higher number of “unconnected” users in rural areas which would subsequently result in higher than expected investment for network deployment. As it takes around three years to conduct a population census, we will have to wait until late 2013 before knowing precisely how many inhabitants – and potential cellular users - there really are, and will be, in Bangladesh. In the meantime, at least demographers all agree that the country still faces several decades of population growth.

In African markets such as Nigeria, Sudan and Ethiopia, the results of population censuses have also been widely debated and statistical counting methods disputed. According to GSMA Intelligence, these three countries will represent 22 percent of regional cellular connections in 2015, yet their prospect for growth is likely to be higher than expected considering the likelihood of underestimated population figures.

In 2011, population censuses are also being conducted in some 20 countries around the globe including Brazil, Sri Lanka and India - one of the largest censuses in the history of mankind. Last year, censuses were reportedly undertaken in China, Indonesia, Malaysia, Mexico, Philippines and Russia which along with Bangladesh, Brazil, Sri Lanka and India are forecast to represent 52 percent of global connections in 2015 (compared with 47 percent in 2010).

In any case, these markets are currently the largest and fastest-growing cellular markets in the world, and their long-term prospects for growth are not in doubt.