The mobile market performed slightly better than expected in FY16 and Q117, leading us topositively revise our forecast outlook to 2021 in the Q317 telecommunications update. Japan's maturetelecommunications industry is characterised by high-speed internet connections. Operators have enjoyedsuccess in pursuing multi-device strategies due to a high appetite for advanced technology and digitalapplications. However, the country's economic slowdown brings considerable downside risks to thisstrategy as it relies on high levels of disposable income. We believe the future of the Japanesetelecommunications market will be driven by the Internet of Things (IoT). With virtually 100% 3G/4Gpenetration, latest trends are reflective of operators' rush to use this high technological base to push forsubscribers to take up higher-value digital services.
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Mobile subscriptions grew by 3.0% y-o-y in Q417, despite market saturation, reaching 166.268mn byend-June. Almost 100% of these subscribers are 3G/4G users, and this is in line with our 3G/4Gforecast of over 166.3mn subscribers by end-2017, a number which will rise modestly to 170.2mn byend-2021.