The United Kingdom - Telecommunication Services: An attractive and competitive market (Strategy, Performance and Risk Analysis)
The UK is a highly developed and competitive economy in Western Europe, however, the economy has entered into an era of uncertainty post the Brexit referendum, though the telecom industry is not expected to be affected in the short term. The United Kingdom offers a favourable business environment with low churn rate, despite low minutes of usage and ARPS.
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Data and internet revenue outpaces voice revenue
Contrary to voice, mobile data revenue increased at a CAGR of 1.6% during the review period, with expectations for the rise to continue at a CAGR of 3.2% during 2016-2021, to reach US$16,769.6 million. Voice revenue fell during 2012-2016 at a CAGR of -13.2%. It is expected to continue to drop at a CAGR of -8.1% during the forecast period, reaching US$5,716.8 million in 2021.
Improving technology to foster data demand
In terms of mobile subscriptions, the UK is the second largest market in western Europe. Increasing mobile subscriptions and enhancement in technology resulted in the growth of mobile data users (with respect to population) from 84.5% in 2012 to 85.5 % in 2016. This is expected to reach 94.4% in 2021. With growing data penetration, coupled with a consistent rise in demand for data and high speeds, operators are largely investing in technology and network enhancement. Subscriptions for LTE-4G significantly increased at a CAGR of 455.1% during the review period, and are expected to continue to grow at a CAGR of 10.9% over 2016-2021.
5G roll-out strategy
The UK’s customers, which highly depend on connectivity as a daily necessity, are experiencing an increase in mobile data traffic per subscriber every year. The roll-out of 5G will further drive mobile data consumption. This technology is expected to be introduced by 2020, with initial pre-commercial deployments expected to begin in 2018 onwards. In order to provide the best options within the telecom industry, Ofcom is planning to choose 700 MHz, 3.4 to 3.8 GHz, and 26 GHz to roll out the technology.