Mobile operators face stagnating revenues in a booming mobile broadband market
The Market in 2013
The mobile communications market in Australia has seen considerable activity in the last year from the mobile network operators, with some of the results of that activity still to come to fruition. Yet some of the forces that are driving change in the mobile sector, such as consumer demand, market saturation and the offering of faster-speed technologies in the fixed- broadband market, are also driving down revenue and ARPU for operators.
Although mobile penetration is now above 130%, and continues to rise as users make use of multiple SIMs and connected devices, Mobile Network Operators (MNOs) must find innovative business models and provide attractive services and bundles to increase revenues in this competitive market.
Previously the MNOs had a hold on the apps and portals market, but with the increased use of over-the-top applications the mobile industry has become a facilitator for broadband infrastructure. This has created a new growth area in the industry, which is based more on infrastructure than on apps or services.
As a consequence of the mobile handset market being driven by the consumer take-up of smartphones and similar devices, mobile broadband usage is also growing strongly. In addition, the growth in the availability and adoption of over-the-top applications are depriving the MNOs of their traditional income streams. Although total mobile services revenue is expected to have grown to nearly $18 billion in 2012, the introduction of reduced network termination rates, coupled with lower costs for monthly mobile broadband packages, means that revenue growth will slow in coming years, reaching perhaps $18.8 billion by 2014. Much of this limited growth will be derived from opportunities available from the nascent LTE sector. Telstra was the first operator to release devices for its LTE service, and has since been joined by both Vodafone and Optus.
One of the key issues for the industry moving beyond 2015 is the desperate need for more spectrum, in order to keep up with the demand for mobile broadband services.
Subscriber and Revenue Statistics
Overall mobile services revenue growth by the MNOs over the last financial year has fallen year-on-year. We should expect to see slower revenue growth from Telstra and Optus into 2014, with revenue again negative for Vodafone. While the issues that saw Vodafone revenues slide are unique, the company will continue to be affected by the loss of subscribers, price competitiveness and the cost of investing in infrastructure as it struggles to compete in the LTE-arena.
BuddeComm expects that revenue from MNOs will show only 2% growth rate year-on-year to 2014. Future revenue growth will be impacted by increased activity from some MVNOs and by tactics deployed to make greater use of upgraded networks.
For the MNOs, the results of the latest financial year are mixed, with Optus (to March 2013) reporting a 2% growth, Telstra showing a 10% growth and VHA, the entity created with the merger of Vodafone and Hutchison, continued to experience steep revenue declines on the back of customer disaffection with service offerings. This report provides analysis of high-level revenue, market shares and revenue growth, as well as revenue earned from mobile voice and mobile data services. In addition, the report includes additional statistical data relating to prepaid and postpaid revenue and average revenue per user (ARPU) for selected mobile voice and data services.
The number of mobile subscribers continues to grow steadily, and by mid-2013 mobile penetration had reached more than 130%. This reflects population growth as well as the significant proportion of subscribers who make use of multiple phones or SIM cards, often to separate personal from business use. While growth is likely to continue in the next few years as subscriber adoption of smartphones escalates, this will slow in line with higher penetration, to about 2% into 2014.
Network operators can also expect to benefit from further migration among consumers from fixed-line to mobile telecoms.
Telstra remains the market leader with more than 14 million subscribers, Optus has around 9.5 million subscribers, and Vodafone has seen subscriber number fall to just over three million.
This report provides operator statistics for the financial year to March 2013 as well as high-level commentary on the overall market, market shares by operator and details of the 2G, 3G and 4G environments. It also assesses the market share of the prepaid and postpaid segments and reviews the wholesale market.
Data in this report is the latest available at the time of preparation and may not be for the current year