WESTERN EUROPE TELECOMS MARKET: TRENDS AND FORECASTS (16 COUNTRIES)

Transcription

1 REGIONAL FORECAST REPORT WESTERN EUROPE TELECOMS MARKET: TRENDS AND FORECASTS (16 COUNTRIES) WILLIAM HARE, ROMAN ORVISKY and HILARY BAILEY Analysys Mason Limited 2015

2 About this report This report provides: a 5-year forecast of more than 250 mobile and fixed KPIs for Western Europe as a whole and 16 key countries an in-depth analysis of the trends, drivers and forecast assumptions for each type of mobile and fixed service, and for key countries an overview of operator strategies and country-specific topics, in order to highlight similarities and differences between countries a summary of results, key implications and recommendations for mobile and fixed operators. Our forecasts are informed by on-the-ground regional market experts from our topic-led research programmes and our consulting division, as well as external interviews. In addition to our robust set of historical data, our forecasts draw on a unique in-house modelling tool, which applies a rigorous methodology (reconciliation of different sources, standard definitions, top-down and bottom-up modelling). For the complete data set, see the accompanying Excel file at REPORT COVERAGE Geographical Key performance indicators 1 Regions modelled: Western Europe Countries modelled individually: Austria Belgium Denmark Finland France Germany Greece Ireland Italy Netherlands Norway Portugal Spain Sweden Switzerland UK Connections Mobile Handset, mobile broadband 2, M2M Prepaid, contract 2G, 3G, 4G Smartphone, non-smartphone Fixed Voice, broadband, IPTV, dial-up, pay TV Narrowband voice, VoBB ADSL/SDSL, VDSL, FTTH/B, cable, BFWA, other Voice traffic Fixed and mobile Outgoing minutes, MoU Revenue Mobile Service, retail Prepaid, contract Handset, mobile broadband 2, M2M Handset voice, messaging, data Fixed Service, retail Voice, broadband, IPTV, dial-up, BNS, pay TV DSL, FTTH/B, cable, BFWA, other ARPU Mobile: SIMs, handset Prepaid, contract Handset voice, data 1 Business/residential splits are provided for most metrics. 2 Includes USB modem, and mid- and large-screen, but not handset-based data. Analysys Mason Limited

3 Contents 8. Executive summary 9. The Western European telecoms market will decline from EUR252 billion in 2014 to EUR231 billion in Traditional telecoms revenue streams will suffer further heavy losses, outweighing growth in the mobile and fixed data and TV markets 11. Fixed and mobile revenue will decline in most countries and regulatory interventions will reduce the revenue boost brought by consolidation 12. Key trends, drivers and assumptions for the mobile and fixed markets 13. Key implications and recommendations for telecoms operators 14. Regional forecasts and cross-country comparison 15. Geographical coverage: Next-generation services will dominate the mobile and fixed broadband markets of Western Europe by Market context: The Western European telecoms market accounts for an average of 1.9% of GDP, with monthly retail spend of EUR42.7 per capita 17. Revenue and ARPU: Telecoms retail revenue will continue to decline, but pay-tv retail revenue will increase moderately 18. Mobile penetration: Total penetration will not grow in most countries, but significant numbers of users will migrate from prepaid to contract plans 19. Mobile connections: LTE will rapidly become the dominant mobile technology, boosted by the launch of VoLTE services 20. Smartphones and LTE: Smartphones will become the default handset type and smartphone penetration will exceed 100% of the population 21. Mobile ARPU: Declining prices and competition from OTT services will cause ARPU to continue to fall during the forecast period 22. Data revenue: 4G services will dominate mobile service revenue by 2016 and data revenue per megabyte will fall as volumes expand 23. Fixed services: The technology mix is evolving rapidly as customers look for faster broadband and operators seek to cut costs 24. Mobile broadband and pay TV: Connected tablets will boost the number of mobile broadband subscribers and pay-tv competition is increasing 25. Fixed broadband: Growth is a common factor, but varies by country according to the prevailing market characteristics 26. NGA s share of fixed broadband connections: VDSL will be the most important NGA technology, accounting for almost half of lines in Sector analysis: Prepaid and contract ARPU trends are affected by the evolving subscriber base 28. Key drivers at a glance for each Western European market [1] 29. Key drivers at a glance for each Western European market [2] 30. Individual country forecasts 31. France: Market consolidation should bring stability to telecoms revenue 32. France mobile: More smartphones and LTE in the customer base will offset the impact of converged bundles on ARPU 33. France fixed: Bundled offers are a key strategy for reducing churn, but broadband ARPU will decline as a result Analysys Mason Limited

4 Contents 34. Germany: Total telecoms service revenue will continue to decrease, driven by a decline in mobile and fixed voice revenue 35. Germany mobile: Quadruple-play offers will put pressure on handset ARPU, and drive users from prepaid to contract deals 36. Germany fixed: Bundling will reduce broadband ARPU, but the decline will be limited by operators competing on network quality 37. Italy: Telecoms service revenue will continue to decline albeit at a slower rate than previously 38. Italy mobile: LTE gained strength in 1Q 2015 and the potential merger of 3 Italia and Wind may ease price competition 39. Italy fixed: Pay-TV content agreements and NGA may make the broadband market more dynamic, but penetration will lag behind 40. Spain: Telecoms revenue will decline more slowly than in the past as inmarket consolidation, LTE and fibre will ease ARPU pressure 41. Spain mobile: ARPU will be more resilient as LTE gains momentum and fixed mobile bundles may reduce churn 42. Spain fixed: In-market consolidation, fibre deployment and fixed mobile bundles will make the fixed market very dynamic 43. Sweden: Despite a strong performance in 2014, total revenue will decline slowly from 2015 as new service growth slows 44. Sweden mobile: ARPU grew in 2014 because many customers upgraded to contract plans, but this effect will decline from Sweden fixed: FTTH/B will account for more than half of fixed broadband households, but ASPU will continue to be eroded 46. UK: Total revenue will continue to decline slowly because growth from new services will be undermined by bundling discounts 47. UK mobile: The pending mergers of BT and EE, and Three and O2, will alter the competitive landscape significantly 48. UK fixed: Investments in NGA infrastructure will drive take-up of fixed broadband, but bundling will put pressure on ASPU 49. About the authors and Analysys Mason 50. About the authors 51. About Analysys Mason 52. Research from Analysys Mason 53. Consulting from Analysys Mason Analysys Mason Limited

5 List of figures Figure 1: Telecoms and pay-tv retail revenue by service type and total service revenue (retail and wholesale), Western Europe, Figure 2: Telecoms and pay-tv retail revenue growth by service type, Western Europe, Figure 3: Telecoms retail revenue growth by type and country, Western Europe, Figure 4: Summary of key trends, drivers and assumptions for Western Europe Figure 5: Mobile connections by technology generation and fixed broadband household penetration, by country, Western Europe, 2020 Figure 6: Metrics for the 16 countries modelled in Western Europe, 2014 Figure 7: Telecoms retail revenue by service type, fixed voice and fixed broadband ASPU, and mobile ARPU, Western Europe, Figure 8: Telecoms retail revenue by service type, and growth rates, Western Europe, Figure 9: Connections by type, and growth rates, Western Europe, Figure 10: Active mobile SIM penetration by country (excluding M2M), northern Europe, Figure 11: Active mobile SIM penetration by country (excluding M2M), southern Europe, Figure 12: Mobile connections by technology generation (excluding M2M), and 3G and 4G s share of connections, Western Europe, Figure 13: Smartphones as a percentage of handsets, and LTE s share of total connections (excluding M2M), Western Europe, 2014 and 2020 Figure 14a: Mobile ARPU by country, northern Europe, Figure 14b: Mobile ARPU by country, southern Europe, Figure 15: Mobile service revenue and ARPU by technology, Western Europe, Figure 16: Data traffic and revenue per megabyte, Western Europe, Figure 17: Fixed broadband connections by type, and fixed voice, IPTV and mobile broadband connections, Western Europe, Figure 18: Mobile broadband connections by screen size and technology, Western Europe, Figure 19: Pay-TV retail revenue by type, Western Europe, Figure 20a: Residential fixed broadband penetration of households by country, northern Europe, Figure 20b: Residential fixed broadband penetration of households by country, southern Europe, Figure 21a: NGA penetration by country, northern Europe, Figure 21b: NGA penetration by country, southern Europe, Figure 22: Mobile handset ARPU by market segment, Western Europe, Figure 23: Fixed retail revenue by service type and market segment, Western Europe, Figure 24a: Major forecast drivers and impact, by country, Western Europe, Analysys Mason Limited

6 List of figures Figure 24b: Major forecast drivers and impact, by country, Western Europe, Figure 25: Telecoms retail revenue by service type and total service revenue (retail and wholesale), France, Figure 26: Telecoms retail revenue by service type, total service revenue and growth rates, France, Figure 27: Connections by type, and growth rates, France, Figure 28: Mobile, smartphone and 4G penetration rates, France, Figure 29: Mobile ARPU by type, and mobile ARPU, France, Figure 30: Summary of key mobile market drivers and assumptions, France Figure 31: Residential fixed household penetration rates by service type, France, Figure 32: Fixed ASPU by service type, France, Figure 33: Summary of key fixed market drivers and assumptions, France Figure 34: Telecoms retail revenue by service type and total service revenue (retail and wholesale), Germany, Figure 35: Telecoms retail revenue by service type, total service revenue and growth rates, Germany, Figure 36: Connections by type, and growth rates, Germany, Figure 37: Mobile, smartphone and 4G penetration rates, Germany, Figure 38: Mobile ARPU by type, and mobile ARPU, Germany, Figure 39: Summary of key mobile market drivers and assumptions, Germany Figure 40: Residential fixed household penetration rates by service type, Germany, Figure 41: Fixed ASPU by service type, Germany, Figure 42: Summary of key fixed market drivers and assumptions, Germany Figure 43: Telecoms retail revenue by service type and total service revenue (retail and wholesale), Italy, Figure 44: Telecoms retail revenue by service type, total service revenue and growth rates, Italy, Figure 45: Connections by type, and growth rates, Italy, Figure 46: Mobile, smartphone and 4G penetration rates, Italy, Figure 47: Mobile ARPU by type, and mobile ARPU, Italy, Figure 48: Summary of key mobile market drivers and assumptions, Italy Figure 49: Residential fixed household penetration rates by service type, Italy, Figure 50: Fixed ASPU by service type, Italy, Figure 51: Summary of key fixed market drivers and assumptions, Italy Figure 52: Telecoms retail revenue by service type and total service revenue (retail and wholesale), Spain, Figure 53: Telecoms retail revenue by service type, total service revenue and growth rates, Spain, Figure 54: Connections by type, and growth rates, Spain, Analysys Mason Limited

7 List of figures Figure 55: Mobile, smartphone and 4G penetration rates, Spain, Figure 56: Mobile ARPU by type, and mobile ARPU, Spain, Figure 57: Summary of key mobile market drivers and assumptions, Spain Figure 58: Residential fixed household penetration rates by service type, Spain, Figure 59: Fixed ASPU by service type, Spain, Figure 60: Summary of key fixed market drivers and assumptions, Spain Figure 61: Telecoms retail revenue by service type and total service revenue (retail and wholesale), Sweden, Figure 62: Telecoms retail revenue by service type, total service revenue and growth rates, Sweden, Figure 63: Connections by type, and growth rates, Sweden, Figure 64: Mobile, smartphone and 4G penetration rates, Sweden, Figure 65: Mobile ARPU by type, and mobile ARPU, Sweden, Figure 66: Summary of key mobile market drivers and assumptions, Sweden Figure 67: Residential fixed household penetration rates by service type, Sweden, Figure 68: Fixed ASPU by service type, Sweden, Figure 69: Summary of key fixed market drivers and assumptions, Sweden Figure 70: Telecoms retail revenue by service type and total service revenue (retail and wholesale), UK, Figure 71: Telecoms retail revenue by service type, total service revenue and growth rates, UK, Figure 72: Connections by type, and growth rates, UK, Figure 73: Mobile, smartphone and 4G penetration rates, UK, Figure 74: Mobile ARPU by type, and mobile ARPU, UK, Figure 75: Summary of key mobile market drivers and assumptions, UK Figure 76: Residential fixed household penetration rates by service type, UK, Figure 77: Fixed ASPU by service type, UK, Figure 78: Summary of key fixed market drivers and assumptions, UK Analysys Mason Limited

8 Retail revenue (EUR) Data traffic (MB) Revenue (EUR billion) ARPU (EUR per month) Western Europe telecoms market: trends and forecasts (16 countries) Data revenue: 4G services will dominate mobile service revenue by 2016 and data revenue per megabyte will fall as volumes expand This forecast report includes two new metrics: a split of service revenue by technology and data traffic. 4G revenue will account for 56% of mobile service revenue by 2016, and more than 80% by G will continue to command a significant ARPU premium compared to 2G and 3G, largely because of the higher data consumption associated with a faster connection. We expect the differential to grow during the forecast period, because the customers left on 2G or 3G will be those less likely to use their devices intensively. Note that the ARPU for 4G fluctuates in the early years of the forecast because initially it was used primarily for mobile broadband, which commands a lower ARPU than 4G handsets. Figure 15: Mobile service revenue and ARPU by technology, Western Europe, Revenue: ARPU: 2G 3G 4G Figure 16: Data traffic and revenue per megabyte, Western Europe, Source: Analysys Mason Data traffic per connection (including handsets and mobile broadband) will grow to around 3GB per month by 2020 (up from 500MB in 2014). Mobile data retail revenue 1 per megabyte in Western Europe averaged EUR1.5 cents in 2014, but this will fall to EUR0.3 cents by This decrease represents a CAGR of 22%, but data revenue will grow at 4.5% CAGR Mobile data retail revenue is defined as revenue from mobile broadband (datacards, USB modems and connected tablets, M2M, handset messaging and handset data and content). 2 Mobile data traffic and related results are available exclusively in Analysys Mason s DataHub. Data traffic per connection Data revenue per megabyte Source: Analysys Mason Analysys Mason Limited

9 CONTENTS EXECUTIVE SUMMARY REGIONAL FORECASTS AND CROSS-COUNTRY COMPARISON INDIVIDUAL COUNTRY FORECASTS ABOUT THE AUTHORS AND ANALYSYS MASON Analysys Mason Limited

10 About the authors William Hare (Senior 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 also leads the European Country Reports programme, which provides insightful reports on 30 European telecoms markets. He is a key contributor to our European Core Forecasts and Global Telecoms Forecasts programmes, specialising in business and market modelling and data analysis. William joined Analysys Mason s Research practice in 2010 after 3 years as a consultant in our Consulting practice, working directly with clients in Asia, Africa and Europe. He read mathematics at the University of Cambridge. Roman Orvisky (Research Analyst) is a member of the regional markets research team in London, contributing mainly to the Telecoms Market Matrix, European Core Forecasts and European Country Reports programmes. Prior to joining Analysys Mason in November 2014, he worked in the Transaction Services department of the Royal Bank of Scotland in a customer experience internship role. During his studies, Roman focused on consumer behaviour in an online context, and has experience in churn modelling in the telecoms sector, social network analysis and browsing data analysis. Roman holds a Bachelor s degree in business from Durham University, and an MSc in marketing research from the Tilburg University School of Economics and Management. Hilary Bailey (Head of Data) has worked for Analysys Mason for more than 20 years. She has overall responsibility for the Analysys Mason core data portfolio. She helped design and implement the Analysys Mason DataHub, an online database that gives easy access to Analysys Mason s core datasets. She specialises in quantitative forecast modelling: she contributes to Analysys Mason s European Core Forecasts research programme, and helped to develop and implement our converged core forecast methodology. She is 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. Hilary has a degree in Economics from the University of Bristol, and an MPhil in Economics from the University of Cambridge. Analysys Mason Limited

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