Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
Research Forecast Report
Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019 July 2014 Hilary Bailey, William Hare and Pablo Iacopino
© Analysys Mason Limited 2014
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Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
About this report This report for the Global Telecoms Forecasts programme provides:
Figure 1: Summary of report coverage [Source: Analysys Mason, 2014]
a 5-year forecast of more than 100 mobile and fixed KPIs for the region as a whole and for 8 countries1 an in-depth analysis of the trends, drivers and well-documented forecast assumptions for each type of mobile and fixed service, and for key countries
Our forecasts are informed by on-the-ground regional market experts, as well as external interviews. In addition to our robust set of historical data, our forecasts draw on a unique and in-house modelling tool, which applies a rigorous methodology (reconciliation of different sources, standard definitions, top-down and bottom-up modelling).
Connections
Revenue
Mobile
Mobile
Handset, mobile broadband1, M2M2 Prepaid, contract 2G, 3G, 4G Smartphone, non-smartphone
Service3, retail Prepaid, contract Handset, mobile broadband1, M2M2 Handset voice, messaging, data
Fixed
Fixed
Voice, broadband, IPTV3, dial-up Narrowband voice, VoBB DSL, FTTH/B, cable, BFWA
Service3, retail Voice, broadband, IPTV, dial-up, BNS DSL, FTTH/B, cable, BFWA
Voice traffic
Mobile
Fixed and mobile
SIMs, handset Prepaid, contract Handset voice, data
France Germany Italy Netherlands Portugal Spain Sweden UK
Outgoing minutes, MoU
For the data set and series definitions, see the accompanying Excel file at www.analysysmason.com/WEGTF14.
© Analysys Mason Limited 2014
Regions modelled: Western Europe
a summary of results, key implications and recommendations for mobile and fixed operators.
See Western Europe telecoms market: complete trends and forecasts (16 countries) 2014– 2019 for data on eight additional countries. Available at www.analysysmason.com/WE2014.
Major KPIs
Countries modelled individually:
an overview of operator strategies and country-specific topics, in order to highlight similarities and differences by means of a cross-country comparison
1
Geographical coverage
ARPU
1
Includes USB modem, and mid- and large-screen, but not handset-based data.
2
M2M connections and revenue figures include mobile services only.
3
Service revenue is the sum of retail and wholesale revenue.
Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
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Contents Slide no.
Slide no.
7.
Executive summary
8.
Telecoms service revenue in Western Europe will continue to decline during 2014–2019
22. The take-up of smartphones and LTE is a key driver in preventing further decline in mobile handset ARPU
9.
The drivers of decline will outweigh the drivers of growth
23. The interplay of market forces and consumer ‘enrichment’ will produce differing rates of decline in mobile ARPU
10. Losses in traditional services are the main contributors to the overall decline in telecoms retail revenue
24. Fixed voice will decline and move from narrowband to VoBB, while fixed broadband connections rise strongly
11. Losses in mobile telecoms retail revenue will be heavier than losses in fixed telecoms retail revenue in most Western European countries
25. Fixed broadband penetration will continue to grow but the most highly penetrated countries will begin to saturate
12. We have revised our forecast to reflect a stronger-than-expected decline in mobile voice revenue, and faster growth in handset data revenue
26. Revenue and ARPU in Western Europe will continue to decline, although recent heavy losses in mobile will not be sustained beyond 2015
13. Key trends, drivers and assumptions for the mobile market 14. Key trends, drivers and assumptions for the fixed market 15. Key implications and recommendations for telecoms operators
27. Telecoms service revenue will decline, but the share of this revenue held by each major country will not change significantly
16. Regional forecasts and cross-country comparison
28. Mobile revenue will be squeezed a little harder than fixed in the forecast period
17. Users in Western Europe will continue to migrate to fixed and mobile next-generation networks
29. Individual country forecasts
18. The Western European telecoms market is showing signs of maturity
30. France: The mobile market will begin to stabilise after a period of intense competition
19. Core services are saturating in Western Europe, but we expect strong growth in mobile M2M and IPTV connections
31. France: Key trends, drivers and assumptions
20. Population penetration of handsets and mobile broadband SIMs is peaking in many Western European markets
33. France: The fixed broadband market will begin to saturate
21. The transition to LTE is underway, and most mobile connections will be 4G by 2018
© Analysys Mason Limited 2014
32. France: Handset connections have scope for growth
34. Germany: Losses in fixed and mobile voice revenue contribute to an overall decline in telecoms revenue
Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
Contents Slide no.
Slide no.
35. Germany: Key trends, drivers and assumptions
46. UK: Telecoms revenue stopped growing in 2013 and will begin to decline
36. Germany: Total handsets will peak in 2014 but smartphone take-up has considerable room for growth 37. Germany: Fixed broadband will grow more strongly with the advent of PSTN switch-off 38. Italy: Telecoms service revenue will decline because the economic outlook is uncertain and competition is intense
47. UK: Key trends, drivers and assumptions 48. UK: Handset penetration and ARPU are both set to decline
49. UK: Fixed broadband growth will eventually slow down, and regulatory measures will curb ASPU 50. About the authors and Analysys Mason
39. Italy: Key trends, drivers and assumptions
51. About the authors
40. Italy: Mobile penetration (excluding M2M) will be nearly stable during the next few years, but the handset mix will improve
52. About Analysys Mason
41. Italy: Fixed broadband ARPU will slightly increase as leading operators are investing to upgrade their networks to FTTC/VDSL
54. Consulting from Analysys Mason
42. Spain: Revenue pressure will ease in the last part of the forecast period because economic recovery may reduce budget constraints 43. Spain: Key trends, drivers and assumptions 44. Spain: We forecast a slight recovery in the number of handsets and mobile broadband connections from 2015 afterwards 45. Spain: Fixed broadband population penetration will reach 29% by 2019, and FTTH/B will take the lead in 2018
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53. Research from Analysys Mason
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Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
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List of figures Figure 1: Summary of report coverage Figure 2:
Telecoms retail revenue by service type and total service revenue (retail and wholesale), Western Europe, 2009–2019
Figure 3:
Telecoms retail revenue growth by service type, Western Europe, 2013–2019
Figure 4: CAGRs for fixed and mobile retail revenue (2013–2019) and market size by total retail revenue (2019), by country, Western Europe
Figure 14: Smartphones as a percentage of handsets, and LTE’s share of total connections (excluding M2M), Western Europe, 2013 and 2019 Figure 15: Mobile ARPU by country, Western Europe, 2009–2019 Figure 16: Fixed broadband connections by type, and fixed voice, IPTV and mobile broadband connections, Western Europe, 2009–2019 Figure 17: Fixed broadband penetration of households by country, Western Europe, 2009–2019
Figure 5: Telecoms retail revenue by service type and total service revenue, previous and new forecasts, Western Europe, 2013 and 2018
Figure 18: Telecoms retail revenue by service type, fixed voice and fixed broadband ASPU, and mobile ARPU, Western Europe, 2009– 2019
Figure 6: Summary of key drivers and assumptions for the mobile market, Western Europe
Figure 19: Telecoms retail revenue by service type, total service revenue and growth rates, Western Europe, 2013–2019
Figure 7: Summary of key drivers and assumptions for the fixed market, Western Europe
Figure 20: Service revenue by country, Western Europe, 2013
Figure 8: Mobile connections by technology generation and NGA share of fixed broadband connections, by country, 2019
Figure 22: Telecoms retail revenue by service type, and total service revenue (retail and wholesale), by country, Western Europe, 2013 and 2019
Figure 9: Metrics for the eight countries modelled individually in Western Europe, 2013 Figure 10: Fixed and mobile penetration rates by service type, Western Europe, 2009–2019 Figure 11: Connections by service type, and growth rates, Western Europe, 2013–2019 Figure 12: Active mobile SIM penetration by country (excluding M2M), Western Europe, 2009–2019
Figure 13: Mobile connections by technology generation (excluding M2M), and 3G and 4G’s share of connections, Western Europe, 2009– 2019
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Figure 21: Service revenue by country, Western Europe, 2019
Figure 23: Telecoms retail revenue by service type and total service revenue (retail and wholesale), France, 2009–2019 Figure 24: Telecoms retail revenue by service type, total service revenue and growth rates, France, 2013–2019 Figure 25: Connections by type, and growth rates, France, 2013–2019 Figure 26: Summary of key drivers and assumptions, France Figure 27: Mobile, smartphone and 4G penetration rates, France, 2009– 2019 Figure 28: Handset ARPU by service, and mobile broadband and M2M ARPU, France, 2009–2019
Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
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List of figures Figure 29: Fixed penetration rates by service type/technology, France, 2009–2019
Figure 46: Fixed ASPU by service type, Italy, 2009–2019
Figure 30: Fixed ASPU by service type, France, 2009–2019
Figure 47: Telecoms retail revenue by service type and total service revenue (retail and wholesale), Spain, 2009–2019
Figure 31: Telecoms retail revenue by service type and total service revenue (retail and wholesale), Germany, 2009–2019
Figure 48: Telecoms retail revenue by service type, total service revenue and growth rates, Spain, 2013–2019
Figure 32: Telecoms retail revenue by service type, total service revenue and growth rates, Germany, 2013–2019
Figure 49: Connections by type, and growth rates, Spain, 2013–2019
Figure 33: Connections by type, and growth rates, Germany, 2013–2019
Figure 51: Mobile, smartphone and 4G penetration rates, Spain, 2009–2019
Figure 34: Summary of key drivers and assumptions, Germany
Figure 52: Handset ARPU by service, and mobile broadband and M2M ARPU, Spain, 2009–2019
Figure 35: Mobile, smartphone and 4G penetration rates, Germany, 2009– 2019 Figure 36: Handset ARPU by service, and mobile broadband and M2M ARPU, Germany, 2009–2019
Figure 50: Summary of key drivers and assumptions, Spain
Figure 53: Fixed penetration rates by service type/technology, Spain, 2009– 2019 Figure 54: Fixed ASPU by service type, Spain, 2009–2019
Figure 37: Fixed penetration rates by service type/technology, Germany, 2009–2019
Figure 55: Telecoms retail revenue by service type and total service revenue (retail and wholesale), UK, 2009–2019
Figure 38: Fixed ASPU by service type, Germany, 2009–2019
Figure 56: Telecoms retail revenue by service type, total service revenue and growth rates, UK, 2013–2019
Figure 39: Telecoms retail revenue by service type and total service revenue (retail and wholesale), Italy, 2009–2019 Figure 40: Telecoms retail revenue by service type, total service revenue and growth rates, Italy, 2013–2019 Figure 41: Connections by type, and growth rates, Italy, 2013–2019 Figure 42: Summary of key drivers and assumptions, Italy Figure 43: Mobile, smartphone and 4G penetration rates, Italy, 2009–2019 Figure 44: Handset ARPU by service, and mobile broadband and M2M ARPU, Italy, 2009–2019 Figure 45: Fixed penetration rates by service type/technology, Italy, 2009– 2019
© Analysys Mason Limited 2014
Figure 57: Connections by type, and growth rates, UK, 2013–2019 Figure 58: Summary of key drivers and assumptions, UK Figure 59: Mobile, smartphone and 4G penetration rates, UK, 2009–2019 Figure 60: Handset ARPU by service, and mobile broadband and M2M ARPU, UK, 2009–2019 Figure 61: Fixed penetration rates by service type/technology, UK, 2009– 2019
Figure 62: Fixed ASPU by service type, UK, 2009–2019
Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
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The take-up of smartphones and LTE is a key driver in preventing further decline in mobile handset ARPU
90% 80% 70% 60% 50% 40% 30% 20%
10%
Smartphones:
2013 2019
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LTE:
Western Europe
UK
Sweden
Spain
Portugal
Netherlands
Italy
Germany
0%
2013 2019
Percentage of connections
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% France
Percentage of handsets
Figure 14: Smartphones as a percentage of handsets, and LTE’s share of total connections (excluding M2M), Western Europe, 2013 and 2019 [Source: Analysys Mason, 2014]
Smartphone adoption was well established at 51% of active handsets by the end of 2013. The Netherlands led the field with 64% smartphone penetration of handsets, and Italy among the lowest, at 35%. Smartphones will account for 79% of handsets in Western Europe by 2019. Sweden’s penetration will be highest at 92%, and Germany will trail at 73%. Our recent smartphone survey has convinced us that the extent of smartphone ownership is limited in some countries: a significant sub-set of respondents showed no interest in owning such a device. Sweden had the highest 4G share of connections in 2013 at 11%, and this will rise to 81% by 2019. Italy was trailing at 1% in 2013, but this will rise to 46%.
The smartphone and LTE smartphone ownership will generally bolster handset ARPU, and to counter the downward pressure on revenue from market competitiveness. An LTE smartphone will generate much higher data volumes than a basic phone, but this will not be charged for in proportion to volumes, and comes along with a strong threat to traditional services, because voice and messaging can be successfully carried on OTT alternatives.
Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
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Fixed broadband penetration will continue to grow but the most highly penetrated countries will begin to saturate Figure 17: Fixed broadband penetration of households by country, Western Europe, 2009–2019 [Source: Analysys Mason, 2014]1
100%
The demand for fixed broadband services will be a function of demographic trends (household size, the average age of the population) and operators’ coverage plans, including NGA. We forecast that fixed broadband services have substantial scope for take-up, unless:
Percentage of households
90%
80% 70%
a market is already well penetrated (such as in France and the UK)
60% 50%
NGA roll-out plans are not ambitious (such as in France, Greece and Italy)
40% 30%
there is cultural resistance to broadband (such as in Italy)
20%
mobile services are strong and the fixed network is generally not well adopted (such as in Finland).
10%
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
0%
1
Fixed broadband penetration of households will grow from 74% to 83% during 2013–2019, but this will vary by country.
France
Germany
Italy
Netherlands
Portugal
Spain
Sweden
UK
Western Europe
Fixed broadband penetration is calculated as total fixed broadband connections (residential and business) divided by the number of households.
© Analysys Mason Limited 2014
PSTN switch-off plans in Germany and Norway are to be implemented using a full or partial retail VoBB solution, so we expect continued strong growth in fixed broadband in these countries. In countries where fixed broadband players have consolidated (such as in Germany and the Netherlands), we expect a more unified approach to marketing, and other synergies, to boost demand for fixed broadband services.
Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
Executive summary Regional forecasts and cross-country comparison Individual country forecasts About the authors and Analysys Mason
© Analysys Mason Limited 2014
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Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
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About the authors Hilary Bailey (Senior Analyst) has worked for Analysys Mason for more than 20 years. She specialises in quantitative forecast modelling: she manages and is a key contributor to Analysys Mason’s European Core Forecasts research programme, and helped to develop and implement our converged core forecast methodology. She is also one of the key contributors to Analysys Mason’s Telecoms Market Matrix, which tracks and compares telecoms metrics and market shares for all the major fixed and mobile operators in Europe. She has previously specialised in telecoms price comparison studies encompassing fixed, mobile and the converged fixed/mobile markets. Hilary has a degree in Economics from the University of Bristol, and an MPhil in Economics from the University of Cambridge. William Hare (Analyst) is the leader of Analysys Mason’s Telecoms Market Matrix research programme, which tracks and compares telecoms metrics and market shares for all the major fixed and mobile operators in Europe. He joined Analysys Mason’s Consulting division in 2007, before transferring to the Research division in 2010. William's primary specialisations include business and market modelling and data analysis, for both the mobile and fixed telecoms markets. He read mathematics at the University of Cambridge.
Pablo Iacopino (Senior Analyst) focuses on forecasting and analysing telecoms markets in Europe and Latin America. He leads Analysys Mason’s Global Telecoms Forecasts and European Country Reports research programmes, and is the lead analyst for research on the Latin America region. Pablo is also a key contributor to our European Core Forecasts and Telecoms Market Matrix. Pablo joined Analysys Mason in 2012, after 8 years in the telecoms industry. He worked for 5 years in Strategy and Investor Relations at Telecom Italia, where he was responsible for European telecoms benchmarking, followed by 3 years in investment banking as a senior equity research analyst covering telecoms stocks. Pablo specialises in industry analysis, benchmarking, modelling, forecasts and valuation. He holds a Master's degree in business administration and a postgraduate Master's degree in statistics and economics from Università degli Studi di Roma ‘La Sapienza’.
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Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
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About Analysys Mason Knowing what’s going on is one thing. Understanding how to take advantage of events is quite another. Our ability to understand the complex workings of telecoms, media and technology (TMT) industries and draw practical conclusions, based on the specialist knowledge of our people, is what sets Analysys Mason apart. We deliver our key services via two channels: consulting and research.
Consulting Our focus is exclusively on TMT. We support multi-billion dollar investments, advise clients on regulatory matters, provide spectrum valuation and auction support, and advise on operational performance, business planning and strategy. We have developed rigorous methodologies that deliver tangible results for clients around the world. For more information, please visit www.analysysmason.com/consulting.
Research We analyse, track and forecast the different services accessed by consumers and enterprises, as well as the software, infrastructure and technology delivering those services. Research clients benefit from regular and timely intelligence in addition to direct access to our team of expert analysts. Our dedicated Custom Research team undertakes specialised and bespoke projects for clients. For more information, please visit www.analysysmason.com/research. © Analysys Mason Limited 2014
Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
Research from Analysys Mason We provide dedicated coverage of developments in the telecoms, media and technology (TMT) sectors, through a range of research programmes that focus on different services and regions of the world.
Alongside our standardised suite of research programmes, our Custom Research team undertakes specialised, bespoke research projects for clients. The dedicated team offers tailored investigations and answers complex questions on markets, competitors and services with customised industry intelligence and insights. To find out more, please visit www.analysysmason.com/research. © Analysys Mason Limited 2014
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Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
Consulting from Analysys Mason For more than 25 years, our consultants have been bringing the benefits of applied intelligence to enable clients around the world to make the most of their opportunities. Our clients in the telecoms, media and technology (TMT) sectors operate in dynamic markets where change is constant. We help shape their understanding of the future so they can thrive in these demanding conditions. To do that, we have developed rigorous methodologies that deliver real results for clients around the world. Our focus is exclusively on TMT. We advise clients on regulatory matters, help shape spectrum policy and develop spectrum strategy, support multi-billion dollar investments, advise on operational performance and develop new business strategies. Such projects result in a depth of knowledge and a range of expertise that sets us apart. We help clients solve their most pressing problems, enabling them to go farther, faster and achieve their commercial objectives. To find out more, please visit www.analysysmason.com/consulting. © Analysys Mason Limited 2014
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Western Europe telecoms market: concise trends and forecasts (8 countries) 2014–2019
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