Fitch Ratings: Smartphone data price a key factor

While the advent of “smartphones" has spurred growth in revenues for mobile phone operators, the key risk lies in how operators will price data, according to global credit rating firm Fitch Ratings. Smartphones such as the iPhone, Blackberry, and Android are characterized by larger screen sizes and user-friendly operating systems, acting as a platform device for installing computer software. Currently, there is a smartphone-driven growth in data average revenue per user, which has the potential to drive higher free cash flow (FCF) levels for mobile phone operators over the medium term, Fitch reported Tuesday. Smartphones are “clearly incentivizing" subscribers to pay for higher-priced data bundled packages in most Asia-Pacific markets, said Fitch. However, “all-you-can-eat" data offerings — as opposed to tiered packages where subscribers pay more according to their actual data usage — may cause restrictions in network capacity once smartphone users represent over 30 percent of an operator’s total subscriber base, Fitch warned. Still, many operators have decided to keep their marketing focus on all-you-can-eat data packages due to competitive pressures, according to the ratings firm. Other risks for operators include higher operating costs to subsidize a rapid subscriber transition to costlier smartphones, and potentially lower voice revenues given that operators may lower voice tariffs to attract and retain subscribers, particularly in highly competitive markets, Fitch reported. “There is a clear need for the impact of pricing plans to be fully understood before adjusting FCF forecasts," Fitch added. — LRS/VS, GMANews.TV