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Standard Broadband ARPU Anticipated In Hong Kong In Next 10 Years

Hong Kong's broadband average revenue per user is the second-highest in East Asia, following Japan. It is a highly saturated market with 2.4 million estimated subscriptions, which translates to a penetration of 93.2% as of year-end 2019. By 2029, we estimate there will be 2.7 million subscribing households, while penetration remains roughly the same level at 93.3%. In such a highly mature market, broadband revenue is projected to gradually increase from $784.4 million in 2019 to $933.3 million by 2029 as the ARPU of each broadband platform is anticipated to remain stable in the next 10 years.

Fiber is the dominant broadband platform in Hong Kong with a subscriber share of 80.9% and a revenue share of 88.9% as of year-end 2019. By 2029, the platform's subscriber share is expected to reach 94% while fiber revenue will make up 96.7% of the market's total fixed broadband revenue. As technology advances, fiber broadband is becoming less expensive compared to 10 years ago. We estimate monthly ARPU of fiber dropped from $31.98 in 2008 to $28.46 in 2017 before regaining marginal growth in 2018. In the next 10 years, fiber monthly ARPU is projected to maintain minimal growth, from $29.88 in 2019 to $30.01 by year-end 2029.

DSL is the second biggest broadband platform with an estimated 303,000 subscribers as of year-end 2019. As the platform loses subscribers to fiber, DSL ARPU has also been on a decreasing trend in the past 10 years. Despite slight fluctuations, we anticipate the market's monthly DSL ARPU will drop from $16.53 in 2019 to $15.77 by 2029.

Similar to DSL, cable has recorded subscriber losses in the last 10 years due to the growth of fiber technology. To cover profit loss from churns, i-Cable raised its cable broadband ARPU from 2013 to 2016 until it was acquired by the current owner in 2017. Since then, i-Cable has attempted to retain subscribers by lowering its price significantly. The lowest cost plan with download speeds of up to 200 Mbps is priced at HK$88 ($11.23) per month. Hong Kong's monthly cable ARPU is projected to further contract from $13.39 in 2019 to $13.07 in 2020 before regaining marginal growth to $14.52 by 2029.

Fixed wireless and satellite account for 0.3% and 0.1% of Hong Kong's total broadband subscriptions, respectively, as of year-end 2019. As fixed wireless is generally bundled with telcos' fiber/DSL service plans, its monthly ARPU remains low at $4.83 in 2019 and is expected to gradually decline to $4.17 by 2029. Satellite ARPU, estimated at $35.60 per month in 2019, is the highest among all fixed-broadband platforms in Hong Kong.

Global Multichannel is a service of Kagan, a media market research group within S&P Global Market Intelligence's TMT offering.

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