blog Market Intelligence /marketintelligence/en/news-insights/blog/steady-broadband-arpu-growth-expected-despite-fierce-competition-in-east-asia content
BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
PRIVACY & COOKIE NOTICE

Login to Market Intelligence Platform

New User / Forgot Password


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *

* Required

In this list
Segment

Steady Broadband ARPU Growth Expected Despite Fierce Competition In East Asia

Capital Markets

S&P Global - Data Services

Disney Ups Its Bid For Fox Assets To $84.97 Billion

Energy

Power Forecast Briefing: Natural Gas And Coal Dynamics, Pressure On Nuclear, And Southwest Capacity

Bidding War Over Fox Could Spur Titans To Take A Look At Paramount Pictures

Technology, Media & Telecom
Steady Broadband ARPU Growth Expected Despite Fierce Competition In East Asia

Highlights

The following post comes from Kagan, a research group within S&P Global Market Intelligence. To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

The East Asian region covers some of the world's largest and most well-developed fixed broadband markets including China, Japan, South Korea, Hong Kong, and Taiwan. China leads the world's fixed broadband market in terms of subscriber numbers, reporting 350.4 million subscribers and subscription revenue of $24.4 billion as of year-end 2017.

Kagan, a media research group within S&P Global Market Intelligence, forecasts China will maintain its leadership with 494.8 million subscribers generating revenue of $48.5 billion by 2027. Despite its size, China's average blended monthly average revenue per user at $6.29 was the lowest among the five countries as of year-end 2017, while China Mobile Ltd. reported the lowest basic tier price in the region at $4.20 per month. The country's broadband ARPU is expected to grow as the market saturates with a penetration rate of 96.6% by 2027.

Japan leads the region with the highest blended monthly ARPU of $29.84 as of year-end 2017. KDDI Corp. and J:COM, the country's third- and fourth-largest broadband operators in terms of subscriber numbers, reported the region's highest basic tier monthly prices at $33.90 and $26.60 respectively. While Japan's economic recovery remains on track, the country's fixed broadband ARPU is expected to grow steadily to reach $36 per month by 2027.

Japan is also the world's third-largest fixed broadband market after China and the United States, reporting 39.8 million subscribers and subscription revenue of $14.1 billion as of year-end 2017. The market is expected to reach 47.2 million subscribers with a revenue of $20.4 billion by 2027. There is still room for the country to drive subscriber growth as its fixed broadband penetration rate remained at a relatively low level of 74.1% as of year-end 2017. The growth of fiber networks will accelerate saturation of the fixed broadband market, with service penetration to reach 88% by 2027.

South Korea and Hong Kong are at the world's forefront in terms of broadband penetration levels. As of year-end 2017, our analysis indicated a 98.1% penetration for South Korea and a 93.6% penetration for Hong Kong. While both markets are well-developed and mature, the focus will continue to be on driving ARPU growth through upgrading subscribers from DSL and cable to fiber connections and from basic fiber plans to premium, such as the Giga internet plans that have been the priority of the South Korean operators.

Having said that, fierce competition in South Korea prevents the country's operators from raising prices to a larger extent in order to retain subscribers and drive subscriber growth. The country's average blended ARPU, while fluctuating somewhat, has remained at more or less the same level over the last 10 years. The average blended monthly ARPU was $16.36 at year-end 2008 as compared to $16.14 at year-end 2017. In the coming 10 years, we estimate that South Korea’s ARPU will increase slowly to reach $19 per month by 2027, given the increased demand for higher-speed broadband stimulated by the growth of over-the-top and value-added services, such as those associated with the internet of things.

Hong Kong reported the region's second-highest average blended ARPU after Japan at $26.05 per month as of year-end 2017. Hong Kong's major operators PCCW Ltd. and HKBN Ltd. offer the region's third and fourth most expensive basic tier packages at $24.14 and $21.83 per month respectively. The two operators, which also offer the fastest broadband connection in Hong Kong, are expected to maintain their leading positions and contribute to the market's average blended ARPU growth to reach $30.84 per month by 2027.

Taiwan's broadband 67.8% penetration rate was the lowest among the five markets as of year-end 2017. The market's penetration rate dropped from 89.9% in 2015 as its regulator, the National Communications Commission, revised its calculation to include public wireless LAN subscribers under wireless broadband as of June 2016. Incumbent operator Chunghwa Telecom reported the fourth-lowest basic tier price in the region at $7.08 per month, while the market's average blended monthly ARPU was $11.71.

Chunghwa has been leading the market with its low price, high-speed fiber connections and its market share was reported at 64% as of year-end 2017. Its leading position is expected to be challenged by its cable competitors which are on track to complete digitization and quickly increase the speed of their internet services. While cable operators sustain their influential local presence and are eager to drive subscriber growth through tariff reductions, the market's ARPU is expected to grow marginally to reach $13.20 per month by 2027. Taiwanese subscribers have benefited from the affordable broadband prices due to the fierce competition in the market. Taiwan reported an affordability index of 0.3% based on the market's 2017 per capita gross national income purchasing power parity.


Watch: S&P Global - Data Services


Technology, Media & Telecommunications
Disney Ups Its Bid For Fox Assets To $84.97 Billion

Highlights

The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Jun. 21 2018 — Walt Disney Co. on June 20 submitted a new bid for 21st Century Fox Inc.'s assets valued at approximately $71.17 billion in equity, or $84.97 billion including assumed debt.

The new bid is $38 per share, a step up from Disney's previous $28-per-share offer made in December 2017, and more in line with Comcast Corp.'s $35-per-share all-cash bid from June 13. In the merger release, Disney said, "Since the original agreement was announced, the intrinsic value of these assets has increased, notably due to tax reform and operating improvements."

Disney's new bid allows Fox shareholders to choose cash or stock, something the management of both companies believe is a better deal than Comcast's proposal. There is a collar on the stock consideration that will ensure that 21st Century Fox shareholders receive a number of Disney shares equal to $38 in value if the average Disney stock price at closing is between $93.53 and $114.32.

The previous Disney bid for the Fox assets had a seller's multiple of 12.8x and a buyer's multiple of 9.0x. The new bid puts the seller's multiple at 15.4x cash flow and the buyer's synergized multiple at 10.8x cash flow.

After six months of integration planning, Disney's management team is confident in its outlook as the company has made progress toward meeting regulatory requirements in countries around the world.

On the investor call to discuss the bid, Disney Chairman and CEO Bob Iger said the combination would allow for the creation of more appealing content while also expanding Disney's direct-to-consumer offerings and international presence, especially in Europe, India and Latin America. He also cited the acquisitions of Pixar, Marvel and Lucasfilm as recent evidence of Disney's ability to effectively integrate cultures across corporations.

Iger said that vertical-integration concerns with Comcast are significant because the Philadelphia-based company is the leading provider of broadband in the U.S. Disney feels it has a much clearer path to the merger, as it is not a leading provider of video or broadband distribution.

Judge OKs AT&T/Time Warner, Opening A Potential Bidding War For FOX Assets

Learn More

Bidding War Over Fox Could Spur Titans To Take A Look At Paramount Pictures

Learn More

Watch: Power Forecast Briefing: Natural Gas And Coal Dynamics, Pressure On Nuclear, And Southwest Capacity

Jun. 20 2018 — Steve Piper shares his Q1 2018 analysis and power market insights along with guidance from our Power Forecast solution on the Market Intelligence platform. The next guidance report will be released around mid-July 2018.

Learn more
Contact us

Technology, Media & Telecommunications
Bidding War Over Fox Could Spur Titans To Take A Look At Paramount Pictures

Highlights

The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Jun. 15 2018 — Potentially boosting its international portfolio and massively increasing the company's film and television library, Comcast Corp. on June 13 announced a $35-per-share cash bid for most of 21st Century Fox Inc., a 25% premium to the $28 per share offered by Walt Disney Co.

Kagan estimates that the Comcast offer values the Fox filmed entertainment division at $17.76 billion, nearly $4 billion more than the value placed on it in Disney's original bid. The transaction places the most value on the regional sports networks at more than $19 billion, or 24.2% of the total offer, with filmed entertainment coming in a close second at 22.4%.

While 21st Century Fox has close to a 16% share of the box office year-to-date, it has done better in prior years when big franchise films were in release. Comcast's NBCUniversal Media LLC would benefit greatly by adding the Fox studio to its portfolio. NBCU currently has less than a 10% share of the box office versus Disney's more than one-third share for its films.

The question is, who is next? Long-struggling Viacom Inc. missed a chance to sell a 49% stake in Paramount Pictures Corp. to Dalian Wanda Group Corp. Ltd. in 2016 at a valuation of $8 billion-$10 billion, an impressive number given the fact that the filmed entertainment division had negative operating income before depreciation and amortization of $328 million in fiscal 2017 and negative $407 million in fiscal 2016.

With the much-publicized showdown between Shari Redstone and Les Moonves over the future of Viacom, a sale of Paramount Pictures, all of Viacom or even a piecemeal sale of Viacom assets at high prices could help resolve this simmering feud.

Economics of TV & Film is a regular feature from Kagan, a group within S&P Global Market Intelligence's TMT offering, providing exclusive research and commentary.

Learn more about Market Intelligence
Request Demo