Australia Telecoms Industry Report – 2019-2023

Australia Telecoms Industry Report – 2019-2023

This report provides analyses of revenue and market forecasts as well as statistics of the Australian telecoms industry including market sizing, 5-year forecasts, market insights, key telecom trends and also features the following:

Overall Telecommunications Market by Major Operators
Telco Operators Profile, Revenue and EBITDA Mix
Mobile and Broadband Subscribers & Revenue Market Overview and Forecasts
Spectrum Holdings
IoT Market Overview
Fixed Broadband Market: NBN, FTTP, HFC, FTTN and FTTC
National Broadband Network Detailed Market Overview and Forecasts
Thematics / Opportunities relating to 5G and NBN
Telco Infrastructure Review
Telco Transaction Database
About this report:
Pages: 93
Author: Landry Fevre
Publication Date: August 2020

Australia Telecoms Industry Report - 2020-2025 quantityADD TO CART
Category: Australia Tags: 4G, 5G, Aussie Broadband, Broadband, Mobile, NBN, NBN Co, Optus, Superloop, Telco, Telstra, TPG, Uniti Group, Vocus, Vodafone
Description Additional information
Description

The Australia Telecoms Market Industry Report, 20209-2025 includes an overview of the Australian market dynamics, market sizing, market forecasts, analysis, insights and key trends

EXECUTIVE SUMMARY

Australia Telecoms Industry Report at a Glance

Globally, the telecommunications sector is proving to be a core and essential infrastructure service to national economies, with data infrastructure becoming critical in a connected world and will likely increasingly attract a new class of investors such as large infrastructure funds. Idem Est Research expects the Australian telecommunications industry to remain steady thanks to the defensiveness nature of the industry, amid the political uncertainties and an uncertain economic outlook due to the COVID-19 pandemic.

Australia has one of the most competitive and mature telecommunications markets in the world. Idem Est Research forecasts that mobile subscriptions will continue to grow in the 2020-25 period while fixed broadband subscribers also expected to grow at a slightly lower average rate over the same period. The ratio of the telecommunications sector revenue to GDP is declining from a peak in 2000 to an all-time low in 2020.

Idem Est Research forecasts the overall telecoms market is expected to decline until 2021 as NBN subscriber payments to Telstra will decrease gradually as all Telstra’s copper and HFC services are migrated onto the NBN and market growth will resume from 2022 onwards.

Telstra’s share of the telecommunications revenue pie has been declining over the last 5 years and its EBITDA share is declining even faster as Telstra’s dominance in the fixed-line market is challenged with the migration onto the NBN.

Capex Investments
The capital expenditure (Capex) from telecommunications operators is coming off from an all-time peak between 2017 to 2018 due to the NBN investments in upgrading Australia’s fixed broadband infrastructure. Idem Est Research expects Capex investments to remain sustained to accommodate for data usage growth, mobile coverage expansion and capacity improvements. NBN expects a steady Capex spend from 2021 which excludes any further gigabit speeds network upgrade to full-fibre still pending for nearly 70% of premises. Instead, NBN will be required to continually invest in HFC and fixed wireless to increase capacity and accommodate more customers and higher data usage.

Mobile Subscribers and Revenue
The mobile subscriber market increased between 2014 and mid-2020 with Telstra and Optus growing their postpaid subscriber base and Telstra also increasing its MVNO and IoT subscribers significantly over the same period 2014-2020 period. Idem Est Research estimates the Australian mobile subscribers will increase on the back of population growth and Internet of Things subscribers take-up.

Mobile network operators are facing competitive pressure with the market shifting to unlimited voice and text and data allowance as the sole offering differentiator. Operators are also bundling mobile plans with content offerings such as sport, music and video streaming.

Australia is now in the unfortunate position of being the only country in the developed world with a higher average mobile speed compared to fixed broadband as per Ookla speed tests.

Broadband Subscribers & the NBN
Idem Est Research estimates the broadband subscribers growth will be sustained by household growth and a reduction of the number of underserved premises previously not able to connect now served by the Internet but now served by the NBN.

The NBN project remains a politically contentious issue for the country. The NBN has failed to address a flawed pricing structure, including a contentious usage charge, resulting in high pricing and is a wholesale failure to deliver affordable gigabit speed in comparison to countries such as New Zealand or Singapore who launched national broadband plans at a similar time. For the third year in a row, NBN also shifted its forecasted positive cash flow position to 2023 after increasing its forecast Capex spend.

By 2023, Idem Est Research forecasts most subscribers migrated to NBN broadband services with a few remaining ADSL services in fixed wireless and satellites services and a number of fibre premises provided by greenfield operators and in-fill operators supplying wholesale services on the same terms as NBN. Opticomm, Uniti, Telstra with its legacy fibre Velocity estates and TPG are sharing the non-NBN market.

NBN Enterprise Products
The NBN enterprise product rollout strategy is creating a lot of industry debates. On one hand, the NBN embarked on a strategy targeting high ARPU enterprise customers investing in a dedicated team reporting to NBN’s CEO while the industry is arguing that NBN’s push in overbuilding existing fibre infrastructure – in some instances joining 6 other fibre providers competing to offer services in the same Melbourne CDB building – is not in its remit and capital investments should be directed to upgrade underserved areas or residential services in FTTN or HFC areas with poor speeds.

On the other hand, the NBN product service is also opening up new opportunities in areas where enterprise fibre services were not present prior to the NBN investment. This, in turn, is creating opportunities for smaller specialist business ISPs to broaden their footprint and offerings and address the small and medium market segment that is largely overlooked by the large operators such as Telstra, Optus, TPG and Vocus.

Thematics – 5G / NBN / M&A
The arrival of 4G moved the Internet off our desktops into our palms and pockets, 5G could transform the network from something we carry around to something taking us around either virtually (augmented reality or virtual reality) or in reality (autonomous vehicles), the 5G outcome and benefits beyond fast connectivity remain largely unknown in terms of business models, investments required and timeline.

With 5G a reality now in Australia, telco operators can now do an arbitrage of NBN speeds in areas where the copper lines are very long or in poor health and thus offer a faster service over 5G than NBN at an equivalent price for some segments of the market and some geographies.

This report shows subdued growth due to ARPU pressure compounded by margin pressure in the fixed broadband market is pushing telcos to look for outside opportunities to increase scale. Idem Est Research expects another wave of consolidation in Australia, similar to the 2010-2015 period, post-NBN rollout as margins get squeezed further. Smaller NBN resellers will struggle to compete and sell-out to larger operators. Some market players outside the telco market are seeking growth by exploring ways to increase their scope of products and services offerings. The report outlines examples of some newcomers branching out by reselling broadband access services as a churn reduction strategy and increase consumers’ share of wallet.

Investment funds are assigning high valuation multiples to telecommunications infrastructure assets such as mobile towers, data centres, submarine cable and fibre infrastructure. This report outlines some real market examples of how investors view and value these investments with real industry examples and EV/EBITDA comparatives and benchmarks.

Our Australia Telecoms Industry Report transactions database analysis highlights a resurgence of activity in 2020 and the market’s apetite for larger deals with the Vodafone/TPG merger, Uniti/Opticomm tie-up and the upcoming sale of Optus towers drawing interests from infrastructure investors.

Idem Est Research also outlines select telecommunications transactions over the last 5 years. The last four years saw a slew of tier 2 telcos players rolling up smaller players to increase regional presence and scope of offerings. This came after a period of large consolidation deals that happened between 2010 and 2016. So far in 2020, the Vodafone/TPG merger finally got approved, the Opticomm/Uniti tie-up creates a new telco infrastructure entity and the upcoming sale of Optus towers are putting a renewed focus on large transactions.

The last 3 years saw limited deal activity with most deals done by smaller telcos rolling up smaller players and increasing regional footprint and scale, while large consolidation deals happened between 2010 and 2016. More deals are likely to be on the cards over the next 3 years.

KEY COMPANIES MENTIONED IN THIS AUSTRALIA TELECOMS INDUSTRY REPORT:
AGL, Aussie Broadband, Fetch TV, Foxtel, NBN, Optus, Superloop, Telstra, TPG, Uniti Group, Vodafone, Vocus


1 Key Statistics
1.1 Australia’s Population
1.2 Australia’s Households
1.3 Australia’s GDP
2 COVID-19 Impact
3 Overall Telecommunications Market, 2014–2025
3.1 Market Overview
3.2 Australia’s Race to Lead in 5G and Beyond
3.3 Historical Telecommunications Market Revenue, 2014-2019
3.4 Overall Telecommunications Market Forecast, 2018-2025
3.5 Telecommunications Market Capital Expenditure, 2014-2025
3.5.1 Historical Telecommunications Capex Spend, 2014-2019
3.5.2 Capex to Revenue Country Benchmark
3.5.3 Capex to GDP Benchmark
3.5.4 Telecommunications Capex Spend Forecast, 2018-2025
4 Telecommunications Operators Profile
4.1 Telstra Profile
4.1.1 Telstra Revenue and EBITDA Mix
4.1.2 Telstra InfraCo
4.2 Optus Profile
4.2.1 Optus Revenue and EBITDA Mix
4.3 Vodafone Profile
4.3.1 Vodafone Revenue and EBITDA Mix
4.4 TPG Profile
4.4.1 TPG Revenue and EBITDA Mix
4.5 Vocus Profile
4.5.1 Vocus Revenue and EBITDA Mix
4.6 Superloop
4.7 Other Players Profile
4.7.1 Uniti + Opticomm
4.7.2 Aussie Broadband
5 Australia Mobile market
5.1 Australia Mobile Subscribers Historical and Forecast, 2014-2025
5.1.1 Australia Mobile Subscribers Historical, 2014-2019
5.1.2 Australia Mobile Subscribers Market Share, 2014-2020
5.1.3 Australia Smartphone Share, 2020
5.1.4 Australia Mobile Subscribers Forecast, 2018-2025
5.2 Australia Mobile Revenue Historical and Forecast, 2014-2025
5.2.1 Historical Australia Mobile Revenue, 2014-2019
5.2.2 Australia Mobile Revenue Forecast, 2018–2025
5.2.3 Mobile Subscribers ARPU, 2014-2020
5.3 Mobile Coverage
5.4 Spectrum Holdings
5.4.1 Spectrum Regulation
5.4.2 5G and Other Spectrum Auctions
5.4.3 Mobile Frequencies Portfolios Analysis
5.4.1 Spectrum Depth Benchmark by Country
5.5 Mobile Download Data and Pricing Trends
5.6 Mobile Speed Tests
5.6.1 Ookla Mobile Speed Tests
5.6.2 OpenSignal
5.7 Mobile Virtual Network Operators (MVNO)
5.8 Internet of Things (IoT)
6 Broadband Market
6.1 Fixed Broadband Subscribers Historical, 2014-2020
6.2 Fixed Download Data Trends
6.3 Fixed Broadband Subscribers Forecast, 2020-2025
7 Telecommunications Infrastructure Investments
7.1 The National Broadband Network
7.1.1 Overview of the National Broadband Network
7.1.2 NBN Scope
7.1.3 Legislative Framework for the NBN
7.1.4 Regulatory Framework
7.1.5 Wholesale Only & Uniform Pricing
7.1.6 NBN Industry Implications
7.1.7 NBN Implementation
7.1.8 NBN Financials – NBN Corporate Plan Review 2020-2023
7.1.9 NBN Build
7.1.10 NBN Speeds
7.1.11 NBN Speeds Mix Compared to New Zealand
7.1.12 $50bn Later and Australia is Still a Broadband Backwater
7.1.13 NBN Business Segment – Enterprise Product Threat and Opportunity
7.2 Submarine Cables
7.3 Mobile Tower Infrastructure Landscape
7.3.1 Getting Ready for 5G
7.3.2 Tower Density Benchmark
7.4 Telco Infrastructure Comparative
8 Thematics / Opportunities
8.1 Facing Off Growth Saturation
8.1.1 Going for Scale
8.1.2 Going for Share of Wallet
8.2 New Telecoms Operating Model
8.2.1 The Attraction of Infrastructure Multiples
8.3 5G Developments
8.3.1 5G Overview
8.3.2 5G – Relative Capex Investments and Frequency Range
8.3.3 5G OpenRAN
8.3.4 Beyond 5G
8.3.5 Fixed Broadband Networks Doing the Heavy Lifting
9 Telco Transaction Database
10 Methodology
Australia Telecoms Industry Report – List of Figures
Figure 1 – Telco sector revenue as % of GDP in Australia
Figure 2 –Revenue Profile Historical Mix (A$m), 2014 – 2019
Figure 3 –EBITDA Profile Historical Mix (A$m), 2014 – 2019
Figure 4 – Telecommunications Market Revenue, 2019
Figure 5 – Telecommunications Market EBITDA, 2019
Figure 6 – Telecommunications Revenue & EBITDA Share, 2019
Figure 7 – Total Telecoms Market Revenue and Growth Rate (A$ bn), 2018-2025
Figure 8 – Capex to Revenue Benchmark, 2014-2019
Figure 9 – Capex to GDP Ratio Benchmark, 2014-2019
Figure 10 – Telecommunications Capital & Operational Expenditure Spend, 2000-2025
Figure 11 – Telstra Revenue Mix – FY15-FY19
Figure 12 –Telstra EBITDA Mix – FY20
Figure 13 – Telstra Historical Revenue Mix, FY14 – FY20 (A$m)
Figure 14 – Optus Revenue Mix – 2014-2019 (A$m)
Figure 15 – Optus Historical Revenue Mix, 2014 – 2020 (A$m)
Figure 16 – Vodafone Revenue Profile, 2014-2019
Figure 17 – TPG Revenue Profile, 2014-2019
Figure 18 – Australia Mobile Subscribers Share Comparison, 2014-2020
Figure 19 – Australia Mobile Subscriber Share Comparison, 2014-2020
Figure 20 – Mobile Net Adds (000’s) Comparison, 2015-2020
Figure 21 – Mobile Subscribers Forecast, 2018-2025
Figure 22 – Mobile Revenue Forecast, 2018-2025
Figure 23 – Mobile Subscribers ARPU (A$), 2014-2025
Figure 24 – Subscriptions per MHz of Spectrum, Select Asia-Pacific Countries, 2019
Figure 25 – Mobile Handsets Monthly Download Data, 2017-2019
Figure 26 – Data Pricing Trends in Asia-Pacific (US$ per GB per month), 2017-2019
Figure 27 – Ookla Mobile Speed Test Ranking Comparison
Figure 28 – MVNO Share of the Mobile Market, 1H20
Figure 29 – MVNO Subscribers (k), 2014-2019
Figure 30 – Spectrum available and IoT Landscape in Australia
Figure 31 – Broadband Subscribers Share Comparison, 2014-2020
Figure 32 – Australia Net-Adds (000’s) by Operators, 2015-2020
Figure 33 – Fixed Broadband Monthly Download Data, 2008-2019
Figure 34 – Australia Broadband Subscribers Forecast, 2018-2025
Figure 35 – NBN Architecture Overview
Figure 36 – NBN Corporate Plan Financials, 2018-2023
Figure 37 – NBN Corporate Plans (CP) Cash Flow Projections Comparison
Figure 38 – NBN Subscribers
Figure 39 – Broadband Migration to NBN Nearly Completed
Figure 40 – NBN homes Passed by Technology Forecast (k)
Figure 41 – NBN Services by Speed
Figure 42 – UFB Services by Speed
Figure 43 – Ookla Speed Test Results (Mbps) – July 2020
Figure 44 – Estimated Tower Market Share, 2020
Figure 45 – Subscribers per Tower, 2020
Figure 46 – Telecoms Providers EV/EBITDA Ranges
Figure 47 – 5G Network Slices Structure
Figure 48 – Effect of Frequency on Range
Figure 49 – 5G Capacity and Coverage Layers
Figure 50 – Relative Capex Required for 5G Network Infrastructure Investment
Figure 51 – Telecom Infra Project – OpenRAN Vision
Figure 52 – Volume of Data Downloaded (Terabytes/month), 2010-2019
Figure 53 – Wireless-Only Homes, 2014-2019
Australia Telecoms Industry Report – List of Tables
Table 1 – Australia – Key Statistics
Table 2 – Telecommunications Market Revenue by Operators
Table 3 – Total Telecommunications Market Revenue, 2018-2025
Table 4 – Historical Telecommunications Capex Spend, 2014-2019
Table 5 – Historical Telstra Revenue & EBITDA, FY15-FY20
Table 6 – Telstra InfraCo Asset Portfolio, 2018-2020
Table 7 – Optus Revenue and EBITDA Mix, 2014-2018
Table 8 – Vodafone Revenue and EBITDA Mix, 2014-2018
Table 9 – TPG Revenue and EBITDA Mix, 2014-2019
Table 10 – Vocus Revenue, EBITDA and Capex, 2014-2019
Table 11 – Superloop Revenue, EBITDA and Capex, 2017-2019
Table 12 – Uniti & Opticom Revenue, EBITDA and Capex, 2017-2019
Table 13 – Australia Historical Mobile Subscribers, 2014-1H20
Table 14 – Australia Mobile Subscribers Forecast, 2018-2025
Table 15 – Historical Mobile Service Revenue, 2014-2019
Table 16 – Mobile Service Revenue Forecast, 2018-2025
Table 17 – Historical Mobile ARPU, 2014-2019
Table 18 – Mobile Coverage & Reach – 2020
Table 19 – Historical of Spectrum Auctions and Costs
Table 20 – Spectrum Holdings by Operators and by Bands (MHz)
Table 21 – Mobile Frequencies by Operators and by Band (MHz)
Table 22 – Examples of MVNOs and their Wholesale Providers
Table 23 – Historical Broadband Subscribers, 2014-2020
Table 24 – Historical Broadband EBITDA Margin, 2014-2020
Table 25 – Historical Broadband ARPU, 2014-2020
Table 26 – Australia Broadband Subscribers Forecast, 2020-2025
Table 27 – NBN Technology Mix
Table 28 – Telstra and Optus Estimated EBITDA Margin
Table 29 – Australia Business Broadband Segmentation, 2020
Table 30 – International Submarine Cable Systems with Landing Stations in Australia
Table 31 – Telstra, Optus, Vodafone and TPG Telco Infrastructure Landscape
Table 32 – Vocus, Superloop, Axicom and NBN Telco Infrastructure Landscape
Table 33 – Technology Specifications (ADSL, FTTN, Fibre, 4G/LTE, 4G/LTE-A and 5G)
Table 34 – Volume of Data Downloaded Mix (Terabytes/month), 2010-2019
Table 35 – Telco Transaction Database, 2015-2020

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