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. Idem Est Research 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, Idem Est Research forecasts 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.
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.
Idem Est Research 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.
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.
Idem Est Research 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.
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 COMPANIES MENTIONED IN THIS JAPAN TELECOMS INDUSTRY REPORT:
e-Mobile, Internet Initiative Japan, JCom, JTower, KDDI, NTT, NTT Docomo, NTT Data, Sony-Net, Softbank, Willcom
Japan Telecoms Industry Report – Table of Contents
1 Key Statistics
1.1 Japan Population
1.2 Japan Households
1.3 Japan’s GDP
2 COVID-19 Impact
3 Overall Telecommunications Market, 2014–2025
3.1 Market Overview
3.2 Japan’s Race to Lead in 5G and Beyond
3.3 Historical Telecommunications Market Revenue, 2014-2019
3.4 Overall Telecommunications Market Forecast, 2018-2025
3.5 Telecommunications Market Capital Expenditure, 2014-2025
3.5.1 Historical Telecommunications Capex Spend, 2014-2019
3.5.2 Capex to Revenue Country Benchmark
3.5.3 Capex to GDP Benchmark
3.5.4 Telecommunications Capex Spend Forecast, 2019-2025
4 Telecommunications Operators Profile
4.1 NTT Profile
4.1.1 NTT Revenue and EBITDA Mix
4.1.1 NTT Subsidiaries Revenue Breakdown
4.1.2 NTT Docomo Revenue and EBITDA Mix
4.2 KDDI Profile
4.2.1 KDDI Revenue and EBITDA Mix
4.3 Softbank Profile
4.3.1 Softbank Corporation Revenue and EBITDA Mix
4.4 Rakuten Mobile Profile
4.4.1 Rakuten Mobile
4.4.2 Rakuten Communications Platform
4.4.3 Rakuten Embraces Operator-as-a-Service Model
4.5 Other Companies Profiles
4.5.1 Internet Initiative Japan
4.5.2 Sony Network Communications Inc (So-Net)
5 Mobile Market
5.1 Mobile Subscribers Historical and Forecast, 2014-2025
5.1.1 Mobile Subscribers Historical, 2014-2019
5.1.2 Mobile Subscribers Market Share, 2014-2019
5.1.3 Japan Smartphone Share, 2019
5.1.4 Japan Mobile Subscribers Forecast, 2019-2025
5.2 Mobile Revenue Historical and Forecast, 2014-2025
5.2.1 Historical Japan Mobile Service Revenue, 2014-2019
5.2.2 Mobile Service Revenue Forecast, 2018–2025
5.2.3 Mobile Subscribers ARPU, 2014-2019
5.3 Spectrum Holdings
5.3.1 Spectrum Pricing and Regulation
5.3.2 5G Development and Launches
5.3.3 Mobile Frequencies Portfolios Analysis
5.3.1 Spectrum Depth Benchmark by Country
5.4 Mobile Download Data and Pricing Trends
5.5 Mobile Speed Tests
5.5.1 Ookla Mobile Speed Tests
5.6 Internet of Things (IoT)
6 Broadband Market
6.1 Fixed Broadband Subscribers Historical, 2014-2019
6.2 Fixed Broadband Subscribers Forecast, 2018-2025
7 Telecommunications Infrastructure Investments
7.1 Fixed Infrastructure
7.1.1 Government Plans
7.1.2 Submarine Cables
7.2 Mobile Tower Infrastructure Landscape
7.2.1 Getting Ready for 5G
7.2.2 Tower Density Benchmark
7.3 Telco Infrastructure Comparative
8 Thematics / Opportunities
8.1 Increasing Scale – Consolidation
8.2 Growing Scope – Cross-Industry
8.2.2 Content and IPTV
8.3 New Telecoms Operating Model
8.3.1 The Attraction of Infrastructure Multiples
8.4 5G Developments
8.4.1 5G Overview
8.4.2 5G – Relative Capex Investments and Frequency Range
8.4.3 5G OpenRAN
8.4.4 Beyond 5G
9 Telco M&A Transaction Database
11 Copyright Notice
Japan Telecoms Industry Report – List of Figures
Figure 1 – Telco sector revenue as % of GDP in Japan
Figure 2 –Revenue Profile Historical Mix (JPY bn), 2014 – 2019
Figure 3 – Telecommunications Market Revenue Pool, 2019
Figure 4 – Telecommunications Market EBITDA Pool, 2019
Figure 5 – Telecommunications Revenue & EBITDA Share Estimates, 2019
Figure 6 – Total Telecoms Market Revenue and Growth Rate (JPY bn), 2019-2025
Figure 7 – Capex to Revenue Benchmark, 2014-2019
Figure 8 – Capex to GDP Ratio Benchmark, 2014-2019
Figure 9 – Telecommunications Capital Expenditure Spend, 2000-2025
Figure 10 – NTT Service Revenue Mix, 2014-2019
Figure 11 – NTT Historical Revenue Mix, 2014 – 2019 (JPY bn)
Figure 12 – NTT Service Revenue Mix, 2014-2019
Figure 13 – KDDI Revenue Mix, 2014-2019
Figure 14 – KDDI Historical Revenue Mix, 2014 – 2019 (JPY m)
Figure 15 – Softbank Service Revenue Mix, 2017-2019
Figure 16 – Softbank Historical Revenue Mix, 2014 – 2019 (JPY bn)
Figure 17 – Mobile Subscribers Share Comparison, 2014-2019
Figure 18 – Mobile Subscriber Share Comparison, 2014-2019
Figure 19 – Mobile Net Adds (000’s) Comparison, 2015-2019
Figure 20 – Mobile Subscribers Forecast, 2014-2025
Figure 21 – Mobile Service Revenue Forecast (JPY bn), 2018-2025
Figure 22 – Mobile Subscribers ARPU (JPY), 2014-2025
Figure 23 – Mobile Frequencies by Operators and by Band (MHz)
Figure 24 – Subscriptions per MHz of Spectrum, Select Asia-Pacific Countries, 2019
Figure 25 – Mobile Handsets Monthly Download Data, 2017-2019
Figure 26 – Data Pricing Trends in Asia-Pacific (US$ per GB per month), 2017-2019
Figure 27 – Ookla Mobile Speedtest Speed and Ranking Comparison
Figure 28 – Spectrum available and IoT Landscape in Japan
Figure 29 – Broadband Subscribers Share Comparison, 2014-2019
Figure 30 – Japan Net-Adds (000’s) by Operators, 2015-2019
Figure 31 – Broadband Subscribers Forecast, 2018-2025
Figure 32 – Estimated Tower Market Share, 2019
Figure 33 – Subscribers per Tower, 2019
Figure 34 – Telecoms Providers EV/EBITDA Ranges
Figure 35 – 5G Network Slices Structure
Figure 36 – Effect of Frequency on Range
Figure 37 – 5G Capacity and Coverage Layers
Figure 38 – Relative Capex Required for 5G Network Infrastructure Investment
Figure 39 – Telecom Infra Project – OpenRAN Vision
Japan Telecoms Industry Report – List of Tables
Table 1 – Japan – Key Statistics
Table 2 – Telecommunications Market Revenue by Operators, 2014-2019
Table 3 – Total Telecommunications Market Revenue, 2018-2025
Table 4 – Historical Telecommunications Capex Spend, 2014-2019
Table 5 – Total Telecommunications Capex Investments Forecast, 2018-2025
Table 6 – Historical NTT Revenue, EBITDA and Capex, 2014-2019
Table 7 – Historical NTT Segments Revenue, 2014-2019
Table 8 – Historical NTT Docomo Revenue, EBITDA and Capex, 2014-2019
Table 9 – Historical KDDI Revenue and EBITDA Mix, 2014-2019
Table 10 – Historical Japan Telecom Revenue and EBITDA Mix, 2014-2019
Table 11 – Historical Mobile Subscribers, 2014-2019
Table 12 – Japan Mobile Subscribers Forecast, 2018-2025
Table 13 – Historical Mobile Service Revenue, 2014-2019
Table 14 – Mobile Service Revenue Forecast, 2018-2025
Table 15 – Historical Mobile Market Blended Mobile ARPU, 2014-2019
Table 16 – Spectrum Holdings by Operators and by Bands (MHz)
Table 17 – Historical Broadband Subscribers, 2014-2019
Table 18 – Historical Broadband Monthly ARPU, 2014-2019
Table 19 – Japan Broadband Subscribers Forecast, 2018-2025
Table 20 – International Submarine Cable Systems with Landing Stations in Japan
Table 21 – NTT, KDDI, Softbank, JTower Infrastructure Landscape
Table 22 – Technology Specifications (ADSL, FTTN, Fibre, 4G/LTE, 4G/LTE-A and 5G)
Table 23 – Telco Transaction Database, 2006-2020
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