Global annual SMS revenues will be US$23 billion less by 2018
Informa Telecoms & Media today announced that it forecasts global annual SMS revenues will fall by US$23 billion by 2018, to US$96.7 billion, down from US$120 billion in 2013. The decline in global SMS revenues will largely be caused by the continuing adoption and use of over-the-top (OTT) messaging applications in both developed and emerging markets.
By region, Asia Pacific is forecast to experience the highest drop in annual SMS revenues over the forecast period, falling from US$45.8 billion in 2013, to US$38 billion in 2018, according to Informa’s World Cellular Revenue Forecasts 2012-2018, which are available from Informa’s World Cellular Information Service (WCIS) and its Intelligence Centres.
Asia Pacific is where a number of OTT messaging apps have originated, including Tencent’s WeChat (China), Kakao’s Kakao Talk (South Korea) and Naver’s Line (Japan). Much of the revenue loss in Asia Pacific will come from China, where annual SMS revenues are forecast to fall from US$25.4 billion in 2013 to US$19.6 billion in 2018.
OTT messaging apps have also particularly taken hold in those Western European markets which have seen their economies weaken in the wake of the global financial crisis of 2007-2008, such as Spain and Italy, according to Gu Zhang, market forecaster at Informa Telecoms & Media. Informa estimates that, in Western Europe, Italy will see the steepest decline in its SMS revenues, falling to US$2.2 billion in 2018from US$3.3 billion in 2013, representing a compound annual growth rate (CAGR) of minus 7.54%.
However, mobile operators in those markets with a high proportion of postpaid subscribers can somewhat mitigate the impact of OTT messaging applications on their SMS revenues, in that they are able to offer unlimited SMS or large bundles of SMS with their contracts and, as a result, have a lower rate of decline. For example, Informa forecasts that, in South Korea, where 99% of mobile subscribers are postpaid, SMS revenues will decline relatively slowly over the forecast period, from US$2.51 billion in 2013 to US$2.1 billion by 2018. This is a CAGR of minus 3.5%, less than half that of Italy and despite the popularity of Kakao Talk in South Korea. In France, where 74% of subscribers are postpaid, SMS revenues will decline at a CAGR of minus 4.1% from US$4.1 billion in 2013 to US$3.3 billion in 2018.
Almost none of the 59 countries and seven regions covered by Informa’s World Cellular Revenue Forecasts are immune to SMS revenue decline over the forecast period, although some markets – such as Argentina, Colombia, Egypt, Japan, Kenya, Nigeria Turkey, Uganda and the United Arab Emirates – will continue to experience growth for the next two to three years.
While SMS revenues are declining in a number of markets, Informa believes that revenues from enterprise use of SMS are growing, as the corporate and government sectors realize the benefits of using SMS an inexpensive, reliable and widely-available communications channel that helps them to engage with their customers, employees, business partners and the general public.
“Although we are forecasting a decline in SMS revenues, due largely to the well-documented competition from OTT players, the diverse messaging market provides so many complementary use cases that it would be naïve to think that SMS has no future role to play,” said Gareth Sims, Head of Forecasting, Informa Telecoms & Media.
About Informa’s World Cellular Revenue Forecasts
Informa’s World Cellular Revenue Forecasts cover the period 2012-2018, and include data and voice revenue forecasts, SMS and non-SMS data revenue forecasts, data and voice ARPU forecasts, and SMS and non-SMS data ARPU forecasts. World Cellular Revenue Forecasts is available from Informa’s World Cellular Information Service (WCIS). [Link removed due to site no longer being available].
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Informa Telecoms & Media (www.informatandm.com) is the leading provider of business intelligence and strategic services to the global telecoms and media markets.