Emerging Markets
**Mike Roberts**, Principal Consultant
Service Provider
India will not only record the fastest digital growth of 9.6% from 2023-27 but will also maintain its position as the third-largest digital economy over the period, behind only China and the US.
Vietnam will have the second-fastest digital growth over the forecast period of all the 51 countries in the Index, with a weighted CAGR of 9.4% from 2023 to 2027.
Mexico will record the third-highest digital growth of countries in the Index, with a weighted CAGR of 9.4% from 2023 to 2027, leading it to become the 14th-largest digital economy by 2027, up three spots from 17th in 2023.
Indonesia will see a digital growth of 7.6% from 2023-27, the fourth-highest in the Index. That strong growth will see Indonesia pass Russia in 2024 to become the 11th-largest digital economy in the Index.
Aligning government policy and private investment to spur digital growth
Extending digital infrastructure and services to underserved communities
Emerging markets lead growth - Even more so than in developed economies, key emerging markets have turned increased digital investment during the pandemic into a post-pandemic boom in digital growth – one which Omdia forecasts will continue through 2027.
Digital policy inclusion challenges - Challenges to digital growth in emerging markets include government policies that can hinder rather than support digital infrastructure and investment, and ensuring that digital connectivity, services and opportunities are widely available.
India’s connectivity drives growth - India’s boom in quality broadband connections based on fiber and 5G through 2027 will support the rapid growth of other digital segments in the country including enterprise IT and online entertainment.
Vietnam overcomes challenges - Vietnam will see rapid digital growth despite facing challenges that include prices for broadband and other digital services that are so low they can hamper investment, and poor reliability of the undersea cables connecting Vietnam to the global Internet.
Mexico strong in enterprise ICT - Enterprise ICT spending in Mexico will grow 8% from 2023-27, one of the highest rates in the Index. The country will also see robust growth of 16% through 2027 in IoT cellular devices, and 8% growth in online net advertising revenue.
Indonesia providers consolidate - Indonesia’s communications service providers have consolidated through M&A in recent years, and sold off infrastructure such as mobile base stations, in order to raise capital to invest to develop new digital products and services.
India, Vietnam, Mexico and Indonesia will lead digital index growth through to 2027 leveraging investments in digital infrastructure and services.
India’s fixed broadband market has seen rapid growth since 2020, spurred by a shift in consumer behavior in response to the pandemic, which created strong demand for high-quality fiber connections. Fixed broadband subscriptions grew by 21% YoY in 2022 to 31.7 million, which drove revenue to increase 19% to $3.6bn. Omdia forecasts the trend will continue, with fixed broadband subscriptions more than doubling from 41 million in 2023 to 89 million in 2027, for a CAGR of 22%.
Fiber is driving the growth in India’s fixed broadband market, with subscriptions set to increase from 30 million at end-2023 to 71 million in 2027, when fiber will account for 80% of fixed broadband subscriptions in the country.
5G services launched in India in October 2022 at the same prices as 4G services, leading to rapid uptake. Omdia forecasts that 5G subscription in India will jump from 85 million at end-2023 to 697 million by end-2027, fueling India’s digital growth.
Vietnam will see strong growth in its digital economy through 2027 despite significant challenges facing its core infrastructure including the undersea cables connecting Vietnam to the global internet. Those can suffer frequent breakdowns which can interrupt or slow connectivity for enterprises and consumers. Although providers are tackling the problem, it will take significant investments to resolve completely.
Vietnam consumers, like those in a number of other emerging markets, are price sensitive, leading to average revenue per user (ARPU) of $9 in fixed broadband and $4 in mobile. Although that is good for adoption, it also means service providers can be slow to invest to expand coverage, improve network quality and launch new services.
Despite these challenges Omdia forecasts that 5G services will launch in Vietnam in 2024 and will account for 32 million subscriptions in 2027, representing 23% of mobile connections in the country.
Adoption of fixed broadband services in Mexico has taken off since the pandemic, with 72% of households in the country having a fixed broadband connection at end-2022, up from 56% at end-2019.
The growth has been driven by the adoption of fiber broadband, with 31% of households having fiber broadband services at end-2022, up from 8% at end-2019. Omdia forecasts that will increase to 56% by the end of 2027.
Increasing adoption of both fixed and mobile broadband services through 2027 is enabling growth of other digital segments in the country including online net advertising revenue and enterprise ICT spending, which will both see CAGR of 8% from 2023 to 2027.
Indonesia mobile and fixed service providers have consolidated in an effort to improve their financial positions to support the introduction of new services.
Indosat Ooredoo and Tri Hutchison merged to form Indosat Ooredoo Hutchison (IOH), which is the second-largest CSP in the mobile market with 27% of subscriptions, behind market leader Telkomsel which has close to 50%.
In the fixed broadband segment XL Axiata acquired LinkNet in 2022 to become the second-largest provider with close to 10% of subscriptions, but the market is still dominated by Telkom Indonesia which accounted for 84% of subscriptions at end-2022.
CSPs say the moves will support investment in new digital applications and services to drive further growth.
China, India and Brazil are unique in being both large and fast-growing digital economies. The three are the only countries in the top ten in the index by both size and growth
FT-Omdia Digital Economies Index - Country by Total Size, 2023 - 2027
Mike RobertsPrincipal Consultant, Service Provider mike.roberts@omdia.com
