Euromonitor International has identified the top three most prospective broadband Internet markets among emerging economies worldwide, based on fixed and mobile broadband growth since 2008, size of the Internet user base and prospects going forward. The standout markets are Iran, Nigeria and Indonesia, as these countries are witnessing a rapid connectivity programme that is allowing their large populations to become regular consumers of online services. As rural and underserved areas gain access to modernised connections, these markets provide huge opportunities in the uptake of e-commerce, social media and digital subscription products.

Mobile and Fixed Broadband Subscriptions in Iran, Nigeria and Indonesia: 2014

Source: Euromonitor International from International Telecommunications Union/OECD/national statistics

Note: Figures are forecast

1. Iran: Transfer from dial-up to broadband offers an appealing jump in consumption capacity

Low incomes and outdated infrastructure have meant that Iran has one of the largest dial-up subscription markets in the world, set to stand at 1.6 million in 2014. This has traditionally been a major bottleneck to the consumption of online services by local consumers, as slow connection speeds are an impediment to video streaming, gaming and even e-commerce transactions. However, Iran is undergoing rapid dial-up-to-broadband substitution as the state has recognised the value of a better-connected populace. Fixed broadband subscriptions have rocketed by 1,350% over the 2008-2013 period and by 2030 more than two-fifths of homes are set to have those connections.

Opportunities and challenges: While many emerging markets are turning to mobile broadband connections rather than fixed options, due to cost savings in infrastructure, the wireless base remains weak in Iran. Mobile-tailored products based on broadband connectivity will struggle to find consumers outside of major urban centres. However, as relations between Iran and the West have thawed, there are formidable opportunities in market entry for operators and providers in the near future. Thus far, only China and Russia have been expansively active on the Iranian telecom market.

2. Nigeria: Small fixed base but huge potential in the uptake of mobile products

Nigeria has one of the world’s largest mobile subscriber markets and offers impressive opportunities primarily in the mobile broadband space, where rapid m-commerce uptake is driving market growth. Mobile subscriptions are forecast to expand by around a quarter annually in 2014. Compared to Nigeria’s massive population, the country has a minute fixed broadband market. This can be explained due to the high prices for monthly broadband tariffs and weak last-mile infrastructure. Few providers link the country’s many shanty towns with the necessary cabling. However, Nigeria is one of the world’s top 10 markets for fixed broadband subscriptions growth over 2008-2013, and urban demand for fixed business connectivity is expanding.

Opportunities and challenges: The country’s growing mobile broadband penetration rate is providing exciting prospects for mobile payments, as physical banking infrastructure is woefully lacking. According to mid-2014 research by South Africa’s Standard Bank, Nigeria (alongside Kenya) has been the top country in adopting m-payment technology in Africa. This should lay the foundation for consumer purchases of apps, games and other physical and virtual goods via mobile handsets. However, Nigeria has stark digital divides, with wireless broadband capability severely lacking across large parts of the country. Capturing audiences outside of Internet-ready urban areas remains a challenge even for mobile-based services.

3. Indonesia: A nationwide broadband strategy to enhance connectivity prospects of a rising Asian tiger

Fixed-broadband penetration in Indonesia is one of the lowest in the Asia Pacific region due to the high costs of developing infrastructure in the country’s many remote islands. However, telecom operators have been investing in fibre optics to enhance the quality of broadband services and improve accessibility among lower-income consumers. In a sign that operators are focusing on nationwide coverage, Indonesia telecom incumbent Telkom announced in early 2014 that it is on track to pass 15.0 million homes with fibre-optic connections by the end of 2015. Over the 2008-2013 period, Indonesia saw its broadband subscriptions expand by over 230%, and with broadband penetration still low the impressive rate of growth is set to continue.

Opportunities and challenges: The Indonesian consumer market has demonstrated a strong appetite for digital TV and entertainment, with an enhanced fixed broadband environment likely to massively expand opportunities for pay-TV operators and the provision of multi-play packages. Household penetration of cable TV was still below 5.0% in 2013, largely due to inadequate fixed infrastructure.

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