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Things looking up for telecom in Asia

Gartner Dataquest says the business climate is poised to improve after the drubbing the industry took in 2001. Data services are set for explosive growth.

Telecommunications companies in Asia can expect an improved business climate after taking a beating in 2001, according to market researcher Gartner Dataquest.

Last year, revenue for fixed-line telecom services fell nearly 5 percent. However, the market is expected to increase by 2 percent this year to $112 billion.

By 2006, fixed telecom services in the Asia-Pacific region are expected to be worth $137 billion, Gartner Dataquest said in a statement.

Data services, including Internet and public IP services, are poised for explosive growth during the next few years, the researcher said.

"At 24 percent of the total fixed-line market today, this segment is expected to increase to 36 percent by 2006," it said, adding that in four years, revenue from data services is likely to hit $49 billion.

Similarly, in the U.S. market, the telecom industry is not in danger of collapsing, according to separate findings earlier this year from Gartner. It said that the carriers that expanded quickly are working to get out from under their debt and that although sales growth will be tepid, the worst declines are likely over.

Telecommunications companies in the Asia-Pacific region should also pay attention to potentially new sources of revenue such as IP Virtual Private Networks, Ethernet and hosting.

For those looking to penetrate regional markets, it is no surprise that China is a favorite. By 2006, the country's telecom industry will be worth $27 billion, according to Gartner Dataquest. The researcher did not cite the current market value.

China has more than 300 million telephone subscribers and 131 million mobile phone users.

Developed markets such as Japan, Australia, Korea, Hong Kong and Singapore will experience slowing growth rates because of increasing market maturity and competition.

"While usage volume has increased dramatically, there's no significant increase in revenue," said To Chee Eng, Gartner Dataquest's principal analyst for telecom and Internet research.

The Asia-Pacific region's telecom industry will continue to experience single-digit growth rates through 2006, when the market is projected to total $136.8 billion, Gartner Dataquest said.

CNETAsia's Fran Foo reported from Singapore.