Bangkok--5 Jun--Hill & Knowlton Global study demonstrates increasingly vital role of telecommunications in social and economic development Mobile communications is fundamental for Thailand’s economic growth contributing an estimated THB 393 billion (US$ 13 billion) to the national economy in 2007, equivalent to 4.9% of Thailand’s GDP as well as 150,000 jobs. These were some of the key findings of a new study undertaken by Deloitte for the Telenor Group in six emerging economies, Serbia, Ukraine, Bangladesh, Malaysia, Pakistan, and Thailand. The report was based on data provided by Telenor business units and associates, interviews with participants in the wider industry and publicly available data. “The results clearly show that mobile telecommunications is very closely linked to the economic success of a country,” said Arve Johansen, deputy CEO Telenor Group and Head of Region Asia. “We hope these findings will help emphasize the important ways in which mobile technology can improve economic and social conditions of a country,” Johansen added. Of the six countries studied, the economic impact of mobile communications was highest in Thailand, with mobile communications responsible for an approximate THB 393 billion (US$ 13 billion) of economic growth in 2007, compared with US$ 7.5 billion for Ukraine and US$ 6 billion for Malaysia. Additionally, the study showed that mobile communications are becoming increasingly important to Thailand’s economy — the contribution to the Thai economy of THB 393 billion in 2007 is almost one and a half more than the contribution of THB 160 billion in 2004. A key factor for the growing importance of mobile communications, cited by the study, was Thailand’s fast growing mobile penetration rates. The current penetration rate is 75% and by the end of 2007, Thai mobile penetration rate will be more than double the average for the region, driven by low per minute prices, which have fallen by over 70% since 2004. Other ways, cited by the study, in which mobile communications contributes to economic development were its important role in creating employment, creating an infrastructure that allows the economy to further develop and acting as a core source of foreign direct investment (FDI). ”Investment in telecommunications helps to increase investor confidence in other areas of the economy and therefore contributes to attracting FDI,” said Arve Johansen, deputy CEO Telenor Group and Head of Region Asia. Another obvious area where mobile communications contributes to the economy is through improving efficiency. In all the six markets studied, it was found that access to mobile communications can improve information flows; increase work flexibility; and promote business in previously underserved rural areas. ”This study helps quantify the impact of technology as a tool for Thailand’s development. The results confirm that by bridging the digital divide, through increased adoption and development of the country’s mobile communications, Thailand will see real economic benefits,” said Dr. Mun Patanotai, The Minister for Information and Communication Technology of Thailand. “It is important for all parties in the telecommunications industry to work closely to ensure that effective and sustained frameworks for competition are put into place to support ongoing long-term investment in the mobile sectors for the benefit of Thailand economy as a whole,” Dr. Mun added. “As emerging economies continue to develop further, the need for advanced communications infrastructure becomes increasingly important,” said Dr. Chris Williams, Telecommunications Partner at Deloitte.” The next step will be to provide access to broadband via mobile, something which is likely to increase the social and economic impact of the mobile industry even more,” he added. The study also highlighted several intangible benefits that Thai consumers can enjoy from increased mobile communications such as: the promotion of social cohesion by facilitating communication between families and friends; assisting in disaster relief by helping people gain access to emergency services and delivery of “peace of mind” to parents who can keep in touch with their children. About Telenor Telenor is one of the world’s largest mobile operators, and one of the fastest growing providers of mobile communications services worldwide. The company is also among the largest providers of TV, broadband and telephony services in the Nordic region. Telenor has mobile operations in some of the world's fastest growing markets as well as in the most advanced markets. The company holds altogether ownership interests in mobile operations in 12 countries, constituting a total subscriber base of more than 147 million. In Asia, Telenor has ownership interests in DiGi (Malaysia), DTAC (Thailand), Grameenphone (Bangladesh) and Telenor Pakistan. For more information, please visit www.telenor.com The Social and Economic Impact of Mobile Communications Survey findings at a glance There are over 49 million mobile subscribers in Thailand, which equates to a penetration rate of 75%. By 2008, it is anticipated that the Thai penetration rate will be more than double the average penetration rate for the region. The number of mobile connections outnumbers fixed line connections by 7 to 1, as the mobile network operators (MNOs) have effectively taken on the role of universal service provider. Figure 1: Mobile penetration rates in Thailand and Asia Pacific region Source: Wireless Intelligence. Figures from Q4 2007 onwards are forecasts Intense price competition in the market has seen per minute prices fall by over 70% since 2004. Falling prices increasing affordability, alongside further network rollout into rural areas, have been the key driver of penetration growth. The mobile communications industry plays a pivotal role in the economic development of the nation: Creating employment and contributing to GDP. Mobile communications are responsible for around 4.9% of Thailand’s GDP and for approximately 150,000 jobs. Creating an infrastructure that allows the economy to further develop. A 10% increase in mobile penetration may increase long term GDP growth rates by up to 1.2%. Acting as a core source of foreign direct investment (FDI), which is responsible for 20% of the GDP of Thailand. Increasing access to communications, both in terms of voice and broadband / internet, to citizens underserved by Thailand’s fixed line infrastructure. As such, consumers in rural areas and lower income groups are provided with employment and business opportunities that did not previously exist. Figure 2: Employment in Thailand related to Mobile Communications2004 2005 2006 2007 Direct 10,000 12,000 14,000 15,000 Indirect (related industries) 85,000 85,000 87,000 100,000 Multiplier effect 29,000 29,000 30,000 35,000 Total employment 124,000 126,000 131,000 150,000 Source: Deloitte analysis based on data provided by key industry players in interviews, analysis of company accounts and industry reports and data provided by DTAC. Mobile communications can be instrumental in increasing the productivity of workers across sectors in both rural and urban areas. In particular, access to mobile communications can: Improve information flows within companies and between buyers and sellers; Increase work flexibility; and Promote business in previously underserved rural areas. The business use of mobile communications would lead, on average, to a 6% increase in productivity of an individual worker. We estimate that mobile communications will have increased GDP by THB 69 billion in 2007 (around 1% of GDP) via productivity improvements alone. As coverage of the mobile networks increases, more workers will be able to use mobile phones for business purposes and so the productivity impact increases over time. Figure 3: Productivity impact of mobile communications Source: Deloitte analysis based on data provided by key industry players in interviews, analysis of company accounts and industry reports and data provided by DTAC. Consumer benefits are the benefits of mobile communications enjoyed by subscribers. These benefits include: The development of interpersonal and family communications, in particular between urban and rural areas; The promotion of social cohesion; and The extension of communication to those on low income. For media inquiries, please contact: Esben Tuman, Communications Director, Telenor Asia Phone: +66 85 918 4111, e-mail: [email protected] Jerome Leroux, Hill & Knowlton Phone: +66 81 657 3249, e-mail: [email protected]