While the debate still rages over Australia’s US$32bn fibre rollout, blanketing most of the country with superfast fixed-line broadband connections over the next eight years, the country’s mobile-loving population is signing up in droves to speedy internet of the wireless variety.
Telstra, the incumbent operator with the country’s only substantial 4G LTE network, reported earlier this month that it had 2.1m subscribers to its 4G service, which advertises speeds of up to 40Mbps. Telstra’s LTE network is available to about 40% of the population (and expected to rise to 66% by the end of the year). This means that, roughly speaking, around 9% of Australia’s population (and 22% of people currently covered by a network) subscribe to LTE, a share that bodes well for deployments planned elsewhere in the world.
On the fixed-line side, the government-owned National Broadband Network (NBN) says that at the end of 2012 some 34,500 homes and businesses subscribed to the superfast fibre network, around 17% of the total number of premises expected to be connected by this June. Just over 40% of these have taken the fastest possible service, 100Mbps, with the rest choosing slower download speeds.
Australians are accustomed to connecting to the web on the move. The country has the third-highest mobile broadband penetration rate in the world, 97%, behind only Korea and Sweden, according to the OECD. This far outshines Australia’s fixed-line broadband penetration rate of 25%. This raises the question of how superfast fixed and wireless connectivity will develop in tandem. Will superfast speeds direct to the home entice more Australians to subscribe to fibre in addition to their LTE subscriptions? Or will LTE provide enough speed and capacity? Much of the answer will come down to the price and range of services available on fibre-to-the-home connections (like pay-TV). The government is planning to shut down the copper lines currently used for most fixed connections, in effect forcing greater take-up (although not necessarily the full 100Mbps service.) At the moment, in the race for subscribers, LTE is in the lead.
The EIU's Telecoms Briefing offers forecasts and analysis for the world’s major telecoms markets, by combining reliable historical data with the expertise of our country analysts to project trends for the next five years.
April 23, 2013,
18:05 |
Tags: biofuels, China, ethanol, Germany, Japan, renewables, solar, USA, wind
The latest survey of global renewable-energy investment by the Pew Charitable Trusts, a non-profit organisation, paints a relatively sorry picture. Last year, funds devoted to solar plants, wind farms and the like in G-20 industrialised countries fell by 11%. Subsidy cuts in places like Spain and Germany contributed to the decline in investment in wind and solar projects (by 15% and 13%, respectively). Biofuels saw the most dramatic decline, attracting 46% less investment than in 2011 (see our article on the troubles of US maize-ethanol makers).
Renewables have been weaned on government-provided goodies. But clean-tech firms are speeding towards the day when they must flourish on their own—or run out of luck, like China’s once-supreme solar firm, Suntech. China nonetheless offers clean-tech investors more than a splash of consolation. Despite the lull in investment, global renewable-energy capacity still managed to grow by a record 88 gigawatts (GW) in 2012—thanks more than anything to Beijing’s supportive policies. China both topped the 2012 investment charts and added a world-beating 23GW in renewable capacity during the year. Its firms also brighten the global scene by making cheap clean-tech gear, helping investors’ scarcer resources spread further.
China’s methods inspire gripes about unfair competition and punitive trade tariffs. But remove China from the global renewables picture and the industry scene starts to look like a stodgy old European oil painting rather than an upbeat piece of Chinese modern art.
The EIU's Energy Briefing provides forecasts to 2020 and daily news analysis for the world's most important energy markets, along with a database developed in association with the International Energy Agency.
The initial results of the Federal Reserve’s latest round of bank stress tests are out. Only Ally Financial, the majority government-owned auto lender, saw its core capital—the Tier-1 common ratio, to be precise—drop below the regulatory minimum under a “severely adverse scenario”. All of the other big US banks were judged to hold sufficient capital to withstand a deep downturn between now and 2014.
The Fed will publish more comprehensive results on March 14th, when its stress tests will also take into account banks’ plans for managing their capital, including dividend payouts and share buybacks. Last year, Citigroup’s capital plan was rejected by the Fed, which considered its buyback proposals too aggressive in relation to its relatively thin capitalisation.
Although no bank besides Ally Financial failed the initial test this year, some skirted dangerously close to the minimum hurdle rates, suggesting that bullish dividend or buyback plans may not pass muster when they are included in the stress-test calculations. The banks themselves are required to run their own tests, using the same assumptions as the Fed. (Only half of the 18 banks tested have publicly released these self-examinations.) The results of bank-administered tests could be telling; unsurprisingly, most came to rosier conclusions about their capital strength than the Fed. If these lenders’ capital plans also take overly optimistic assumptions into account, a hasty rewrite over the weekend might be necessary.
The gap is widest at Goldman Sachs, which thinks its minimum core capital ratio would fall to 8.6% under the Fed’s assumptions, whereas the Fed itself sees steeper trading and lending losses pushing the bank’s minimum ratio to 5.8%, not far above the 5% required to pass the test.
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
A data release from the US Energy Information Administration (EIA) prompted headlines this week declaring that China had displaced the US as the world’s top oil importer. The background: US imports are tumbling as, on the supply side, it produces more (shale) oil of its own while, on the demand side, the economy runs at half throttle. Meanwhile, Chinese growth is spurring domestic oil demand. The resulting switch in import positions is “a generational shift that will shake up the geopolitics of natural resources”, reports the Financial Times. But the small print reveals some big caveats.
To begin with, the imports in question are net (total imports minus total exports), and not just of crude oil: petroleum products (kerosene, naptha and the like) are also included. Confusingly, though, much of the reporting speaks simply of “oil imports”. Moreover, China’s anointment as the biggest oil importer is based on only one month’s data (December, the month when Chinese refined-product imports tend to peak). Over the whole of 2012 the US bought 7.1m barrels/day of crude and products—net—whereas China purchased 5.7m b/d. When it comes to absolute imports of crude oil alone, the US (8.5m b/d) leads China (5.4m b/d) by an even greater distance, although the gap is closing (see chart).
None of this is to argue that the day—or rather year—when China truly overtakes the US as a net importer of oil and related products will not come. Unless the US shale-oil boom fizzles, for instance, or China replicates it, the “generational shift” is only a matter of time. It just hasn’t happened quite yet.
The EIU's Energy Briefing provides forecasts to 2020 and daily news analysis for the world's most important energy markets, along with a database developed in association with the International Energy Agency.
Solar energy’s star may not be dimming, but it is making decidedly spotty progress. Growth in demand for solar photovoltaics (PV) plunged to a ten-year low last year, according to Solarbuzz, a research company. Only 5% more panels—or 29 gigawatts (GW) worth—were sold in 2012 than in the previous year, the first time in a decade that annual growth dipped below 10%. The result also confounded industry expectations that more than 30GW would be installed; most believe that 45GW is needed to soak up total supply.
The glut of panels is harming the profitability of solar-equipment manufacturers, forcing increasing numbers out of business. US tariffs on Chinese equipment have caused supply-chain disruptions and suppressed demand. The world’s solar factory is also at the centre of a looming trade dispute with the EU, its makers accused of using state subsidies to sell at below cost. This hurts: Europe accounts for 60% of worldwide solar demand and serves as Chinese firms’ biggest market. There are, however, a few rays of hope.
The 29GW sold last year was nonetheless equal to nearly 30% of total installed capacity at the end of 2012, implying resilient installations growth. As Europe’s share of the pie shrinks, new sources of demand are emerging. The Americas accounted for 13% of global PV demand in 2012, driven by California’s aggressive green agenda. Asia burns brighter still, buying 8.7GW. Over the coming year, the region will continue to spur growth: Japan is casting around for alternatives to nuclear power after the Fukushima accident in 2011; India and, especially, China have their own plans. Crucially, too, plummeting panel prices due to overcapacity help overcome the main barrier for solar: its costliness. Unfortunately, to look on the bright side in the solar industry you need a rather long-term lens.
The EIU's Energy Briefing provides forecasts to 2020 and daily news analysis for the world's most important energy markets, along with a database developed in association with the International Energy Agency.
The latest data on bank balance sheets in the euro zone can be read in a number of different ways. Credit continues to contract in the region; private-sector lending fell by €25bn in December, leaving the stock of loans 0.7% lower than the year before. At the same time, private-sector deposits were roughly flat in December, but up by more than 4% on the previous year. (These figures exclude transactions with central governments and other banks.) Deposit inflows at Greek and Spanish banks in recent months suggest that the worst may be over in these crisis-hit countries.
Looking back over the past five years, however, it becomes clear how much further the hardest-hit banking systems need to go to restore their former deposit franchises. Deposit levels in Greece, Ireland and Spain remain near five-year lows. Although deposits have grown since 2008 in the other bail-out countries, Cyprus and Portugal, there have been persistent outflows in recent months, putting these banks under pressure.
Meanwhile, in France and Italy—two large euro zone countries generating anxiety among analysts—bank deposits set new record highs in December. For all of the (justified) concerns about the fiscal situation in these crucial euro zone economies, local bank depositors are not yet showing signs of worry. Whether this reflects confidence in these banks, faith in officials to prop up these banks, or simple inertia remains up for debate.
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
The landmark US$1.9bn settlement between US authorities and HSBC is by far the largest of its kind. The bank’s “wilful and dangerous practices” allowed its American unit to process transactions for Mexican drug gangs and institutions subject to US sanctions in Iran and other countries, according to the Treasury Department.
Although HSBC’s penalty is more than three times the next-largest individual settlement for money-laundering violations—ING’s US$619m fine in June—it could have been worse. A criminal indictment would have put the London-based bank’s licence to operate in the US at risk.
What’s more, on a relative scale HSBC’s penalty is not as harsh as it first appears. The settlement is worth around 11% of last year’s net profit. Standard Chartered’s two-stage settlement with state and federal authorities, worth US$667m in total, is just under 14% of its 2011 profit. In 2009, the US$567m in penalties levied against Lloyds TSB were worth almost half of that bank’s previous-year profit. The US$500m-odd settlements with Credit Suisse and ABN Amro in 2008 and 2009, respectively, came after the banks made big losses in the previous years.
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
Another quarter, another multi-billion-dollar writedown. Computer maker HP’s latest results include the blockbuster revelation of a US$8.8bn impairment to goodwill and intangible assets related to Autonomy, a UK-based software firm purchased by HP for more than US$10bn last year. The bulk of the charge relates to “serious accounting improprieties, misrepresentation and disclosure failures” at the Autonomy unit, HP alleges. In its previous quarter, HP announced US$9.2bn worth of impairments related to its acquisitions of EDS (2008) and Compaq (2002), although no impropriety was alleged in these cases.
On the issues at Autonomy, in addition to notifying British and American authorities HP is “preparing to seek redress against various parties in the appropriate civil courts”. This suggests that the auditors and advisers involved in the deal could be targeted by HP’s management. There are plenty of targets to choose from; Autonomy’s auditor, Deloitte, and HP’s due-diligence accounting firm, KPMG, were joined by nine financial advisers and six law firms on the deal.
In a conference call yesterday, HP CEO Meg Whitman said that she was surprised to learn that the M&A function at HP did not report to the CFO, a situation she changed shortly after taking over in late 2011. With nearly US$20bn in M&A-related impairments over the past year, the external advice that HP receives on its deals may also need a rethink. If the Autonomy deal is anything to go by, more advisers does not necessarily imply better advice.
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
The American auto industry owes a lot to the Baby Boom generation. Born between 1946 and 1964, this group’s penchant for driving more—and more often—than other groups fuelled a long boom in car sales.
However, a new report by the American Association of Retired Persons (AARP), using data collated by the US Department of Transportation and the Bureau of Transportation Statistics, suggests that the historic pattern of year-on-year growth in vehicle miles driven by Baby Boomers is shifting. The study suggests a decline in overall travel rates and an increase in public transit trips per person. In fact, the AARP’s analysis suggests that vehicle use has been falling since 1995, well before a decline due simply to ageing should be expected.
Some of this is attributed to high petrol prices and unemployment. Technological changes, like online shopping and the increase in home-office use, are also factors. The rapid growth of cities in relation to rural areas provides yet another explanation. Together, this supports the increasingly popular theory of “peak car”, which suggests that car ownership and driving distances are reaching saturation point in developed countries.
Not only are car-mad Baby Boomers showing a waning appetite for car use; younger generations appear ambivalent at best about vehicle ownership. Although recent results have given US carmakers reason to cheer, daunting demographic challenges still loom over their longer-term fortunes.
The EIU's Automotive Briefing offers insights on the world’s biggest automotive markets, combining five-year forecasts with analysis of market demand, market share, market segmentation and environmental issues.
Things change quickly in the retail sector, especially in China. Over the next five years, the Chinese market will roughly double in size, overtaking the US—the current market leader—for the first time. By 2022, China’s retail market will grow to twice the size of the US. These and other retail forecasts are featured in a new report from the Economist Intelligence Unit, Retail 2022 (free registration required).
China already overtook the US as the world’s largest food and grocery market this year. Future expansion will be fuelled by the country’s swift GDP growth. In 2002 China’s nominal GDP was less than 15% of the US; it now stands at 52% of American GDP. We expect the nominal size of China’s economy (in dollar terms) to surpass the US by 2022.
The combination of economic growth and urbanisation is fuelling China’s rapid retail expansion, and not just in first-tier cities such as Shanghai and Beijing. Rising wages and government-driven efforts to boost consumer spending will see the share of inland urbanites earning over Rmb30,000 (US$4,805) per year in places such as Xi’an and the Chang-Zhu-Tan city cluster roughly double between 2012 and 2022. Given this outlook for China’s burgeoning urban middle-class shoppers, it’s easy to see why many retailers are redoubling efforts to build a presence in the country.
The EIU's Consumer Goods Briefing assesses the consumer goods and retail industry in the world's biggest markets. It leverages the expertise of EIU analysts and data from Planet Retail to offer five-year forecasts for a range of sub-sectors.
