Fast-growing Asian operators get closer to consumers via social networks - Mobile social networking driving data revenue growth in developing Asia-Pacific economies

Mobile social networking is becoming a key driver of mobile data revenue in several fast-growing - but low ARPU - markets in Asia-Pacific, according to new GSMA Intelligence research. The increasing use of social networking mobile apps in markets such as Indonesia, Thailand, Malaysia and China, is identified as an important trend that is enabling local operators to target price-sensitive, prepaid consumer segments with mobile data services.

At Indonesia's XL (Axiata), for example, revenue from data and value-added services grew by 44 percent year-on-year and contributed 16 percent to total revenue in the opening quarter of the year. The growth was mainly driven by the increasing popularity of RSS news feed and social networking applications such as Facebook, Twitter, and instant messaging. XL launched its prepaid micro-SIM card for smartphones and tablets - in addition to the postpaid micro-SIM offered since last year - to accommodate increasing demand from prepaid users for these devices in Indonesia.

Similarly, Thailand's AIS reported that the growth drivers behind mobile data usage included the increasing adoption of smartphones - linked to lower handset prices - and dongles (the 'aircard'), as well as the growing trend of social networking and the operator's device-data bundling package. AIS is offering a wide portfolio of aircards with speed-based pricing (3.6 Mb/s and 7.2 Mb/s download speeds) for both EDGE and 3G networks. In addition, the operator launched its Google Chrome-branded aircard in Q1 2011 - a dongle preloaded with the Google Chrome browser and an application to check remaining airtime and price plan changes (promotions). The operator is developing a number of applications to encourage consumers to stay online longer including location-based promotional services and deals via a GPS-enabled aircard which can connect to a network of 5,000 local partners. AIS has reportedly 7.5 million active data customers, 86 percent of which are on feature phones, 10 percent on smartphones and 4 percent on dongles. Network capacity is supported by the operator's Wi-Fi network, which it is expanding from 15,000 hotspots at present to 50,000 by year-end.

Elsewhere, Malaysia's Celcom (Axiata) launched its homegrown social network - Kolony - which has already attracted 1.8 million users less than three months after launch at the beginning of the year. The introduction of such innovative data services helped the operator generate a 20 percent year-on-year rise in data revenue in Q1. Data now contributes 36 percent of total revenue, up from 30 percent a year ago. Excluding SMS, data revenue increased by 37 percent over the same period.

Meanwhile, 3G connections at China Unicom more than tripled year-on-year, passing the 22 million mark in May 2011. China Unicom launched more than 100 models of customised 3G handsets during 2010 (including Apple's iPhone 4) as well as its application store, WO Store. The consumption of content such as mobile newspapers, mobile music and mobile TV has led to a monthly average data usage per subscriber of 178 MB. In 2011, the operator has committed to "expedite the development of the emerging information service industry and step up efforts in promoting key content application products such as mobile e-commerce, video, reading and social networks." China Unicom's 3G adoption is expected to gain strong momentum (compared to its competitors) due mainly to rapid price erosion in its handset portfolio. According to reports, the operator is selling 4,500 units a day of its ZTE Blade V880, a cost-effective smartphone which it introduced in June 2011.

Chinese operators are also benefiting from the country's homegrown social networks such as Sina Weibo, Renren, Kaixin001, QZone and Pengyou. As of March 2011, Tencent - a major Chinese ISP - had 504.8 million active user accounts on Qzone and 101.4 million active user accounts on Pengyou. Renren is believed to have 31 million active users per month, while Weibo boasts 140 million users. Tencent reported that revenues from its mobile value-added services increased by 6.8 percent sequentially in Q1 2011 to CNY777.8 million (US$120 million), and represented 12.3 percent of total revenue. This growth was primarily driven by the company's bundled SMS packages as well as an increase in revenues from mobile social networking sites and mobile games.

Joss Gillet, Senior Analyst, GSMA Intelligence:

Generating substantial data revenues from price-sensitive prepaid customers is a daunting task in any market, but some operators in fast-growing Asian economies have found a sweet spot. The consumer craze for social networking apps is helping operators to encourage users to stay online longer, yet operators taking a 'homegrown' approach should be cautious to retain engagement with end users. For instance, MTS Russia showed that by engaging with its youth audience via a social networking campaign (linked to Facebook), it managed to reduce churn by 27 percent. The Red Quest project - launched during the summer of 2010 in Moscow - was aimed at engaging consumers to fight a local environmental catastrophe with online and offline interaction. At the end of the campaign the site had attracted more than 1 million users, while awareness of the MTS Red Energy tariff reached 83 percent of the target audience, sales were up 20 percent and churn levels on the Red Energy tariff decreased by 15 percent. Mobile operators in low-ARPU markets could learn from such practices in order to nourish users' appetite for data services. In India, the large potential for 3G services does not only depend on the wide availability of affordable devices but also on differentiated value-added services from operators. With the recent arrival of Google+ onto the global social network landscape, operators will be able to leverage consumer choices for some time.