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EMOBILE in Japan may encourage LTE new entrants

Photograph of Mark HeathPotential LTE new entrants may be buoyed by the success of EMOBILE in Japan. EMOBILE has demonstrated the viability of a new entrant pursuing a data-centric mobile strategy in a highly-competitive market. It has achieved a sizeable customer base and an attractive EBITDA margin in a relatively short period.

New entrant EMOBILE is Japan’s latest mobile network operator, having rolled out a greenfield HSPA network. It launched mobile broadband services via dongles and PC datacards in March 2007 and subsequently introduced Japan’s first HSPA+ mobile broadband service in December 2010. EMOBILE offers peak download speeds of 42Mbps and provides coverage to 91.9% of Japan’s population.  It plans to move to LTE by 2012.

EMOBILE has created a significant customer base in a relatively short time, as shown in the figure below. By March 2011, it had 3.2 million customers. This is all the more impressive given the level of competition in the Japanese mobile market and, in particular, the presence of the market leader NTT DoCoMo. By March 2011, NTT DoCoMo had deployed a total of 62,800 outdoor HSPA base stations and 29,200 indoor HSPA base stations. NTT DoCoMo already claims to offer HSPA coverage to 100% of Japan’s population.

Chart of customer base growth for EMOBILE in Japan

Growth in the number of EMOBILE customers in Japan, 2007-2011

While many European operators still generate a significant proportion of their revenues from voice services (although these voice revenues are declining at a rapid rate), EMOBILE has demonstrated the viability of a data-centric mobile strategy. Initially, EMOBILE focused on providing mobile broadband access using dongles, but it has now expanded its services to include smartphones. EMOBILE generated an average monthly ARPU of JPY2950 (USD37) in the quarter to March 2011. Through the combination of substantial ARPU and a sizeable customer base, EMOBILE has managed to achieve an EBITDA margin in excess of 33%, as shown in the figure below.

Chart of EBITDA margin for mobile operator EMOBILE in Japan

EBITDA margin for EMOBILE in Japan, to March 2011

The performance of EMOBILE may give hope to prospective new entrants in developed mobile markets, where the adoption of LTE could allow them to follow similar data-centric strategies.

Dr Mark Heath co-founded Unwired Insight in 2001, to provide analysis and market intelligence for the mobile telecommunications industry. Previously he contributed to the standardisation of GSM, UMTS and DECT and held senior roles for a mobile network operator and equipment manufacturer. Mark has written over 40 industry reports and has advised investors, network operators, equipment vendors, lawyers and government bodies.

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