Mobile industry to target 1.8 billion 'unconnected' users over next five years - New research highlights growth opportunity in the developing world

The mobile industry has the opportunity to target an additional 1.8 billion ‘unconnected’ people over the next five years, according to new GSMA Intelligence research.

In a major new report published this month, GSMA Intelligence calculates that there will be a total ‘addressable’ mobile subscriber base of around 5 billion people by 2017 – up from about 4.7 billion this year.

While the usual method of simply counting connections (ie: SIM cards) suggests that global mobile penetration is close to surpassing 100 percent, the research found that the total number of unique subscribers (ie: people) stands at only 3.2 billion. This represents just 45 percent of the world’s current 7 billion population and is 1.8 billion short of the 5 billion addressable market expected by 2017 – presenting a significant growth opportunity for operators.

More than one in two people worldwide is forecast to have subscribed to a mobile service in five years as subscriber penetration climbs to 53 percent in 2017, up from 45 percent in 2012.

However, there is a significant gulf in penetration levels between developed and developing markets. By the end of this year, the developed region is forecast to be close to 80 percent unique mobile subscriber penetration – the threshold above which subscriber growth will begin to slow. In contrast, subscriber penetration in the developing world is forecast to increase from 39 percent in 2012 to 47 percent in 2017.

This suggests that the vast majority of the 1.8 billion opportunity over the next five years will involve connecting ‘unconnected’ users in developing economies, which will require building-out network coverage into rural areas.

GSMA Intelligence estimates that GSM networks currently cover around 70 percent of the developing population, up from 37 percent in 2009. There are about 1.5 billion unconnected users included in today’s total addressable mobile base, a figure forecast to reduce to 1.1 billion of the 5 billion addressable market by 2017.

According to the research, approximately a third of the world’s population of 7 billion are unlikely to be able to subscribe to mobile services due to a variety of demographic and socio-economic factors, which sets the total addressable market for mobile services below the world's total population.

The research made the distinction between the number of connections and the number of individual (unique) mobile subscribers by removing inactive connections and taking into account multiple SIM card ownership based on results from large scale primary research. In the developing world, multiple SIM ownership is driven by cost-conscious consumers accumulating prepaid SIM cards, while in developed markets it is influenced by mobile broadband device ownership and the proliferation of shared data plans that allow a single data allowance to be shared across several devices (smartphones, dongles, tablets etc.).

The primary research was conducted in 2009, 2011 and 2012 across 39 countries, representing about 75 percent of global connections. There was an almost even split between developed and developing economies. This field investigation helped to identify the average number of SIM cards per consumer which stands at 1.85 globally this year.

Joss Gilet, Senior Analyst, GSMA Intelligence:

While operators in developed economies are effectively migrating their prepaid user bases to contract segments, operators in developing countries are seeing intense prepaid price competition that translates into low-usage mobile consumers holding a large number of prepaid SIM cards. According to our research, consumers in the developed region use an average of 1.52 SIM cards each, compared to 1.97 each for consumers in the developing region. In Indonesia, for example, consumers use an average of 2.62 SIM cards and in some prepaid segments, 10-12 SIMs per user per year is not uncommon. Our findings show that while price-sensitive demand in developing economies is driving global mobile growth, it will take another decade for the industry to connect the entire 5 billion addressable market. In India, mobile penetration in rural areas grew by only 4 percentage points between July 2011-12 (to 39 percent), reflecting that around half a billion people in the country's rural areas remain unconnected to mobile networks. Similarly, in Malawi, even though GSM networks have reached nationwide population coverage (95 percent), mobile penetration stands at less than one third of the population. Price-sensitive demand means it can take time for the adoption of mobile services to ramp up, even as network coverage rapidly expands and devices become more affordable.

Gross demographic subscriber assessment
Source: GSMA Intelligence, "Global mobile penetration — subscribers versus connections"

¹ Aggregated from UN population data
² Estimated proportion of demographic split in 0-14 and 65+ age brackets, based on World Bank data
³ Estimated proportion of unconnected population; assuming 70% GSM coverage by population in developing markets in 2012