Japan Telecoms Industry Report 2021-2026 | 5G to Drive Increase in Capex Investments

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Aug 25, 2021, 09:30 ET

DUBLIN, Aug. 25, 2021 /PRNewswire/ -- The "Japan Telecoms Industry Report - 2021-2026" report has been added to ResearchAndMarkets.com's offering.

This report provides analyses of revenue and market forecasts as well as statistics of the Japan telecoms industry including market sizing, 5-year forecasts, market insights, key telecom trends, 5G, digital infrastructure and also features the following:

Overall Telecommunications Market by Major Operators
Telco Operators Profile, Revenue and EBITDA Mix
Mobile Subscribers & Revenue Market Overview and Forecasts
Spectrum Holdings
IoT Market Overview
Broadband Subscribers & Revenue Market Overview and Forecasts
Digital Infrastructure (Fibre, Telecom Towers, Data Centres, Submarine Cables)
Telecom Tower Market Analysis and Forecast
Thematics/Opportunities relating to 5G, M&A and e-Commerce
Telco M&A Transaction Database

Why You Should Buy the Japan Telecoms Industry Report:

Benefit from the latest market opportunities
Understand the threats to your operations and investments and protect your company against future risks
Gain insights on emerging trends supporting, enhancing or disrupting your activities in the market
Get a full view of the competitive landscape to assess your market position.
Forecasts as a key input for successful budgeting and strategic business planning in the telecoms market
Target business opportunities and risks in the telecoms sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments
Assess the activities, strategy and market position of your competitors, partners and clients via our Operators Profiles

The Japan Telecommunications Industry Report, 2020-2025 includes a comprehensive review of the Japanese market dynamics, market sizing, market forecasts, analysis, insights and key trends.

Japan Telecoms Industry Report at a Glance

Globally, the telecommunications sector is proving to be a core and essential infrastructure service to national economies, with data infrastructure becoming critical in a connected world and will likely increasingly attract a new class of investors such as large infrastructure funds. The publisher expects the Japanese telecommunications industry to remain steady thanks to the defensiveness nature of the industry, amid the political uncertainties and an uncertain economic outlook due to the COVID-19 pandemic.

The Japanese telecommunications market is the third-largest market in the world by revenue with three large fixed and mobile network operators that invested heavily in towers and fibre infrastructure over the past two decades despite an overall market underpinned by low economic and population growth.

Growing mobile phone penetration and high fixed broadband take-up among households will fuel future growth over the next five years.

Following the market expansion over the last 5 years, forecasts suggest subdued revenue growth growing to 2025, with the Covid-19 pandemic, the diminishing impact of declining legacy voice and SMS revenue, Rakuten market entry and low population growth.

The strategic and economic competition between Japan and China is at the centre of advanced technology competition and the future of global data and communications. For most developed countries in the region, gaining strategic and economic power depends heavily on having technological ascendancy, especially in data and communications.

Capex Investments

The Capex from Japanese operators is cyclical with mobile rollout leading to investments in line with the operators' top-line growth. Capex investments peaked between 2012 and 2014 while all three operators built their respective 4G mobile network. Capex will increase again from 2020 through to 2025, as mobile operators invest in 5G. Japan sees 5G as the backbone of a wide range of technological advances including autonomous vehicles, smart cities and Internet of Things. All three mobile operators launched 5G services in March 2020. The Capex to GDP ratio spiked between 2012 and 2014 and started to slide downwards and stabilising in 2018 and 2019.

The author projects an increase in Capex spend throughout 2020 alone by installing more 5G base stations across all cities, ramping up Japan's 5G rollout nationwide and consolidating its 5G network leadership in terms of subscribers and availability in the country.

Operator Profiles

The Japanese three-player mobile market is a remarkably stable market, however it is about to be rocked by fourth market entrant - Rakuten Mobile - looking to follow the steps of successful new entrants launch such as Free in France and Reliance Jio in India. Rakuten has set an ambitious target of being the first cloud-native mobile network.

Between 2014 and 2019, both NTT and Softbank lost revenue and EBITDA share to KDDI over the last six years, Softbank lost both revenue and EBITDA share while cost reduction measures started to flow in 2019 with improving EBITDA and cash flow.

Mobile Subscribers and Revenue

Average annual mobile revenue growth was lower (1%) than mobile service subscriptions growth (4.7%) during the period 2014-2019, highlighting the structural challenges faced by mobile operators. Declining voice & SMS revenue only partially offset by wireless data monetisation is putting pressure on ARPU, compounded by bundling discounts to stem churn.

IoT connections is a major growth driver for mobile operators, a slowdown in mobile subscriptions growth will put long term pressure, dialling up competition for the three mobile operators fighting for fewer new customers.

According to our benchmark study of mobile data pricing, Japan had among the biggest cost reduction per GB over the last 3 years, while India has the lowest rate in the world with just a few cents per GB.

With a launch due in 2020, many operators are looking to Rakuten Mobile's trailblazing strategy of deploying its network using a cloud-native mobile network blueprint to lower its rollout costs.

The traditional telecommunications model is becoming increasingly hard to sustain amidst declining operating margins and continued expectation for cheaper services and more value inclusion.

The publisher forecasts Rakuten could capture up to 15m subscribers in 3 years by offering lower pricing, e-Commerce bundling and other lifestyle services to its existing 100 million Rakuten customers, while KDDI and to a lesser extent NTT and Softbank already embarked on such journey.

The author forecasts 5G mobile subscribers will represent nearly 68% subscribers of all subscriptions by 2026, 4G will represent about 32% of all connections while 3G will be shut down by the end of 2023.

Broadband Subscribers - FTTH Push to Gigabit Speeds

After over 20 years of investments in fibre infrastructure, Japan boasts one of the highest FTTH penetration in the world as well as one of the most advanced, consumer broadband products offering speeds up to 10Gbps. However, most people use 100Mbps packages which are mostly bundled with mobile services by the three dominant players, NTT, KDDI and Softbank.

Fixed broadband penetration is forecasted to grow modestly as Japan's investments in full-fibre networks are now reaching maturity with affordable packages and increased broadband household penetration growing towards saturation.

Thematics - Telecoms Infrastructure/5G/M&A/Infrastructure

Infrastructure funds, pension funds and government funds are assigning high valuation multiples to telecommunications infrastructure assets such as mobile towers, data centres, submarine cable and fibre infrastructure.

Investment funds are assigning high valuation multiples to telecommunications infrastructure assets such as mobile towers, data centres, submarine cable and fibre infrastructure. This report outlines some real market examples of how investors view and value these investments with real industry examples and EV/EBITDA comparatives and benchmarks.

Our Japan Telecoms Industry Report transactions database analysis highlights the dearth of inbound (domestic) transactions in the Japanese telecommunications services market, with the largest transactions from Softbank entering the mobile market and consolidating its position by acquiring smaller operators. However, in the short to medium term, the mobile telco sector is unlikely to experience corporate activity with Rakuten market entry. Softbank Group is selling down shares of its mobile arm to raise cash and fortify its ailing balance sheet with the group still owning about 62% of its mobile unit.

The arrival of 4G moved the Internet off our desktops into our palms and pockets, 5G could transform the network from something we carry around to something taking us around either virtually (augmented reality or virtual reality) or in reality (autonomous vehicles), the 5G outcome and benefits beyond fast connectivity remain largely unknown in terms of business models, investments required and timeline.

Key Topics Covered:

1 Key Statistics

2 COVID-19 Impact

3 Overall Telecommunications Market, 2014-2026

4 Telecommunications Operators Profile

5 Mobile Market

6 Broadband Market

7 Fixed Telecommunications Infrastructure Investments

8 Japan Telecom Towers Infrastructure Landscape

9 Thematics / Opportunities

10 Telco M&A Transaction Database

11 Methodology

Companies Mentioned

e-Mobile
Internet Initiative Japan
JCom
JTower
KDDI
NTT
NTT Docomo
NTT Data
Rakuten
Sony-Net
Softbank
Willcom

For more information about this report visit https://www.researchandmarkets.com/r/gqjxsi

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Research and Markets
Laura Wood, Senior Manager
[email protected]

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SOURCE Research and Markets