Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 Research Forecast Report Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 July 2014 Hilary Bailey, William Hare and Pablo Iacopino
Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 2 About this report This report for the European Core Forecasts programme provides: a 5-year forecast of almost 250 mobile and fixed KPIs for the region as a whole and for 16 countries 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 an overview of operator strategies and country-specific topics, in order to highlight similarities and differences by means of a cross-country comparison 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 Consulting division, 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). For the full data set and data series definitions, see the accompanying Excel file at www.analysysmason.com/we2014. Figure 1: Summary of report coverage [Source: Analysys Mason, 2014] Geographical coverage Regions modelled: Western Europe Countries modelled individually: Austria Belgium Denmark Finland France Germany Greece Ireland Italy Netherlands Norway Portugal Spain Sweden Switzerland UK Major KPIs 1 Connections Mobile Handset, mobile broadband 2, M2M 3 Prepaid, contract 2G, 3G, 4G Smartphone, non-smartphone Fixed Voice, broadband, dial-up, IPTV, pay TV Narrowband voice, VoBB ADSL/SDSL, VDSL, FTTH/B, cable, BFWA Voice traffic Fixed and mobile Outgoing minutes, MoU Revenue Mobile Service 4, retail Prepaid, contract Handset, mobile broadband 2, M2M 3 Handset voice, messaging, data Fixed Service 4, retail Voice, broadband, dial-up, BNS, IPTV, pay TV DSL, FTTH/B, cable, BFWA ARPU Mobile SIMs, handset Prepaid, contract Handset voice, data 1 Data for business and residential segments is provided for many of these data series. 2 Includes USB modem, and mid- and large-screen, but not handset-based data. 3 M2M connections and revenue figures include mobile services only. 4 Service revenue is the sum of retail and wholesale revenue.
Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 3 Contents Slide no. 8. Executive summary 9. Telecoms and pay-tv service revenue in Western Europe will continue to decline until, as competitive pressures push down ARPU 10. The drivers of decline will outweigh the drivers of growth 11. Losses in traditional services are the main contributors to the overall decline in telecoms and pay-tv retail revenue 12. Losses in mobile telecoms retail revenue will be heavier than losses in fixed telecoms retail revenue in most Western European countries 13. We have revised our forecast to reflect a stronger-than-expected decline in mobile voice revenue, and faster growth in handset data revenue 14. Key trends, drivers and assumptions for the mobile market 15. Key trends, drivers and assumptions for the fixed market 16. Key implications and recommendations for telecoms operators 17. Regional forecasts and cross-country comparison 18. Users in Western Europe will continue to migrate to fixed and mobile next-generation networks 19. Core services are saturating in Western Europe, but we expect strong growth in mobile M2M and IPTV connections 20. Population penetration of handset and mobile broadband SIMs is peaking in many Western European markets 21. The transition to LTE is underway, and most mobile connections will be 4G by 2018 22. The take-up of smartphones and LTE is a key driver in preventing further decline in mobile handset ARPU Slide no. 23. The interplay of market forces and consumer enrichment will produce differing rates of decline in mobile ARPU 24. Fixed voice connections will decline and transition from narrowband to VoBB, while fixed broadband and pay-tv connections will increase 25. Mobile broadband connections will move from USB modems to tablets, while pay-tv revenue continues to show strong growth 26. Fixed broadband penetration will continue to grow but the most highly penetrated countries will begin to saturate 27. NGA share of fixed broadband connections will grow strongly in most Western European countries, reaching 68% for the region as a whole 28. Revenue and ARPU in Western Europe will continue to decline, although recent heavy losses in mobile will not be sustained beyond 2015 29. Residential share of mobile revenue will decline in the forecast period, but residential share of fixed revenue and pay-tv revenue will increase 30. Individual country forecasts 31. France: The mobile market will begin to stabilise after a period of intense competition 32. France: Key trends, drivers and assumptions 33. France: Handset connections have scope for growth 34. France: The fixed broadband market will begin to saturate 35. France: The price squeeze in the mobile and fixed broadband markets will affect the residential segment more than business 36. Germany: Losses in fixed and mobile voice revenue contribute to an overall decline in telecoms revenue
Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 4 Contents Slide no. 37. Germany: Key trends, drivers and assumptions 38. Germany: Total handsets will peak in 2014 but smartphone take-up has considerable room for growth 39. Germany: Residential fixed broadband penetration will grow more strongly with the advent of PSTN switch-off 40. Germany: IPTV will continue to be a small contributor to pay-tv revenue 41. Italy: Telecoms service revenue will decline because the economic outlook is uncertain and competition is intense 42. Italy: Key trends, drivers and assumptions 43. Italy: Mobile penetration (excluding M2M) will be nearly stable during the next few years, but the handset mix will improve 44. Italy: Fixed broadband ARPU will slightly increase as leading operators are investing to upgrade their networks to FTTC/VDSL 45. Italy: The IPTV market will remain a niche in Italy as the pay-tv market is dominated by satellite and digital 46. Spain: Revenue pressure will ease in the last part of the forecast period because economic recovery may reduce budget constraints 47. Spain: Key trends, drivers and assumptions 48. Spain: We forecast a slight recovery in the number of handsets and mobile broadband connections from 2015 afterwards 49. Spain: Fixed broadband household penetration will reach 62% by, and FTTH/B will take the lead in 2018 50. Spain: IPTV will account for 26% of the pay-tv market in, mainly driven by FTTH/B take-up Slide no. 51. Sweden: After years of growth, telecoms retail revenue fell in 2013, and this decline will continue 52. Sweden: Key trends, drivers and assumptions 53. Sweden: Mobile handset penetration of the population will begin to decline, but 90% will be smartphones by 54. Sweden: Strong IPTV take-up will sustain modest growth in fixed broadband bundled revenue 55. Sweden: Mid-screen broadband connections will continue to account for a minority of mobile broadband market connections 56. UK: Telecoms revenue stopped growing in 2013 and will begin to decline 57. UK: Key trends, drivers and assumptions 58. UK: Handset penetration and ARPU are both set to decline 59. UK: Fixed broadband growth will eventually slow down, and regulatory measures will curb ASPU 60. UK: IPTV revenue will be small compared with fixed broadband and total pay-tv revenue 61. About the authors and Analysys Mason 62. About the authors 63. About Analysys Mason 64. Research from Analysys Mason 65. Consulting from Analysys Mason
Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 5 List of figures Figure 1: Summary of report coverage Figure 2: Telecoms revenue by retail and wholesale and as a proportion of GDP, Western Europe, 2009 Figure 3: Telecoms and pay-tv retail revenue growth by service type, Western Europe, 2013 Figure 4: Telecoms retail revenue growth by country, fixed and mobile, Western Europe, 2013 Figure 5: Telecoms retail revenue by service type and total service revenue, previous and new forecasts, Western Europe, 2013 and 2018 Figure 6: Summary of key drivers and assumptions for the mobile market, Western Europe Figure 7: Summary of key drivers and assumptions for the fixed market, Western Europe Figure 8: Mobile connections by technology generation and NGA share of fixed broadband connections, by country, Figure 9: Metrics for the 16 countries modelled individually in Western Europe, 2013 Figure 10: Fixed and mobile penetration rates by service type, Western Europe, 2009 Figure 11: Connections by service type, and growth rates, Western Europe, 2013 Figure 12: Active mobile SIM penetration by country (excluding M2M), Northern Europe, 2009 Figure 13: Active mobile SIM penetration by country (excluding M2M), Southern Europe, 2009 Figure 14: Mobile connections by technology generation (excluding M2M), and 3G and 4G s share of connections, Western Europe, 2009 Figure 15: Smartphones as a percentage of handsets, and LTE s share of total connections (excluding M2M), Western Europe, 2013 and Figure 16: Mobile ARPU by country, northern Europe, 2009 Figure 17: Mobile ARPU by country, southern Europe, 2009 Figure 18: Fixed broadband connections by type, and fixed voice, and mobile broadband connections, Western Europe, 2009 Figure 19: Mobile broadband connections by screen size and technology, Western Europe, 2009 Figure 20: Pay-TV retail revenue, Western Europe, 2009 Figure 21: Residential fixed broadband penetration of households by country, northern Europe, 2009 Figure 22: Residential fixed broadband penetration of households by country, southern Europe, 2009 Figure 23: NGA penetration by country, northern Europe, 2009 Figure 24: NGA penetration by country, southern Europe, 2009 Figure 25: Telecoms retail revenue by service type, fixed voice and fixed broadband ASPU, and mobile ARPU, Western Europe, 2009 Figure 26: Telecoms retail revenue by service type, total service revenue and growth rates, Western Europe, 2013 Figure 27: Mobile handset ARPU by market segment, Western Europe, 2009
Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 6 List of figures Figure 28: Fixed retail revenue by service type and market segment, Western Europe, 2009 Figure 29: Telecoms retail revenue by service type and total service revenue (retail and wholesale), France, 2009 Figure 30: Telecoms retail revenue by service type, total service revenue and growth rates, France, 2013 Figure 31: Connections by type, and growth rates, France, 2013 Figure 32: Summary of key drivers and assumptions, France Figure 33: Mobile, smartphone and 4G penetration rates, France, 2009 Figure 34: Handset ARPU by service, and mobile broadband and M2M ARPU, France, 2009 Figure 35: Residential fixed broadband penetration rates by technology, and fixed voice and IPTV penetration rates, France, 2009 Figure 36: Fixed ASPU by service type, France, 2009 Figure 37: Mobile broadband connections by screen size and technology, France, 2009 Figure 38: Telecoms retail revenue by business and residential service type, France, 2009 Figure 39: Telecoms retail revenue by service type and total service revenue (retail and wholesale), Germany, 2009 Figure 40: Telecoms retail revenue by service type, total service revenue and growth rates, Germany, 2013 Figure 41: Connections by type, and growth rates, Germany, 2013 Figure 42: Summary of key drivers and assumptions, Germany Figure 43: Mobile, smartphone and 4G penetration rates, Germany, 2009 Figure 44: Handset ARPU by service, and mobile broadband and M2M ARPU, Germany, 2009 Figure 45: Residential fixed broadband penetration rates by technology, and fixed voice and IPTV penetration rates, Germany, 2009 Figure 46: Fixed ASPU by service type, Germany, 2009 Figure 47: Mobile broadband connections by screen size and technology, Germany, 2009 Figure 48: Telecoms retail revenue by business and residential service type, Germany, 2009 Figure 49: Telecoms retail revenue by service type and total service revenue (retail and wholesale), Italy, 2009 Figure 50: Telecoms retail revenue by service type, total service revenue and growth rates, Italy, 2013 Figure 51: Connections by type, and growth rates, Italy, 2013 Figure 52: Summary of key drivers and assumptions, Italy Figure 53: Mobile, smartphone and 4G penetration rates, Italy, 2009 Figure 54: Handset ARPU by service, and mobile broadband and M2M ARPU, Italy, 2009 Figure 55: Residential fixed broadband penetration rates by technology, and fixed voice and IPTV penetration rates, Italy, 2009 Figure 56: Fixed ASPU by service type, Italy, 2009 Figure 57: Mobile broadband connections by screen size and technology, Italy, 2009 Figure 58: Telecoms retail revenue by business and residential service type, Italy, 2009
Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 7 List of figures Figure 59: Telecoms retail revenue by service type and total service revenue (retail and wholesale), Spain, 2009 Figure 60: Telecoms retail revenue by service type, total service revenue and growth rates, Spain, 2013 Figure 61: Connections by type, and growth rates, Spain, 2013 Figure 62: Summary of key drivers and assumptions, Spain Figure 63: Mobile, smartphone and 4G penetration rates, Spain, 2009 Figure 64: Handset ARPU by service, and mobile broadband and M2M ARPU, Spain, 2009 Figure 65: Residential fixed broadband penetration rates by technology, and fixed voice and IPTV penetration rates, Spain, 2009 Figure 66: Fixed ASPU by service type, Spain, 2009 Figure 67: Mobile broadband connections by screen size and technology, Spain, 2009 Figure 68: Telecoms retail revenue by business and residential service type, Spain, 2009 Figure 69: Telecoms retail revenue by service type and total service revenue (retail and wholesale), Sweden, 2009 Figure 70: Telecoms retail revenue by service type, total service revenue and growth rates, Sweden, 2013 Figure 71: Connections by type, and growth rates, Sweden, 2013 Figure 72: Summary of key drivers and assumptions, Sweden Figure 73: Mobile, smartphone and 4G penetration rates, Sweden, 2009 Figure 74: Handset ARPU by service, and mobile broadband and M2M ARPU, Sweden, 2009 Figure 75: Residential fixed broadband penetration rates by technology, and fixed voice and IPTV penetration rates, Sweden, 2009 Figure 76: Fixed ASPU by service type, Sweden, 2009 Figure 77: Mobile broadband connections by screen size and technology, Sweden, 2009 Figure 78: Telecoms retail revenue by business and residential service type, Sweden, 2009 Figure 79: Telecoms retail revenue by service type and total service revenue (retail and wholesale), UK, 2009 Figure 80: Telecoms retail revenue by service type, total service revenue and growth rates, UK, 2013 Figure 81: Connections by type, and growth rates, UK, 2013 Figure 82: Summary of key drivers and assumptions, UK Figure 83: Mobile, smartphone and 4G penetration rates, UK, 2009 Figure 84: Handset ARPU by service, and mobile broadband and M2M ARPU, UK, 2009 Figure 85: Residential fixed broadband penetration rates by technology, and fixed voice and IPTV penetration rates, UK, 2009 Figure 86: Fixed ASPU by service type, UK, 2009 Figure 87: Mobile broadband connections by screen size and technology, UK, 2009 Figure 88: Telecoms retail revenue by business and residential service type, UK, 2009
Austria Belgium Denmark Finland France Germany Greece Ireland Italy Netherlands Norway Portugal Spain Sweden Switzerland UK Western Europe Percentage of handsets Percentage of connections Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 22 The take-up of smartphones and LTE is a key driver in preventing further decline in mobile handset ARPU Figure 15: Smartphones as a percentage of handsets, and LTE s share of total connections (excluding M2M), Western Europe, 2013 and [Source: Analysys Mason, 2014] 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Smartphones: 2013 LTE: 2013 Smartphone adoption was well established at 51% of active handsets by the end of 2013. Norway led the field with 80% smartphone penetration, and Greece had the lowest, 30%. Smartphone penetration in Western Europe will reach 79% by. Norway s penetration will have climbed to 94%, and Greece to 50%. Our recent smartphone survey has convinced us that the extent of smartphone ownership is limited a significant sub-set of respondents showed no interest in owning such a device. Finland had the highest 4G share of connections in 2013 at 27%, and this will rise to 87% by. Greece, Italy and Ireland were trailing at 1% in 2013, but by only Greece will lag significantly behind its neighbours with LTE share at 23% (because of economic constraints).
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Percentage of households 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Percentage of households Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 27 NGA share of fixed broadband connections will grow strongly in most Western European countries, reaching 68% for the region as a whole The proportion of premises that will have NGA connections will obviously depend on the degree of roll-out of NGA by incumbents and operators working outside the incumbent roll-out areas, but it also depends on the coverage of cable. 1 We assume that all cable Internet connections will be 30Mbps by the end of our forecast period. In countries without cable networks (Italy and Greece) incumbents are under no great pressure to roll out FTTx or even VDSL-CO, so we expect weak take-up in these countries. Alternative operators in Scandinavia often backed by utility companies have rolled out fibre networks in largely rural and small-town areas where there is no cable network. This has boosted availability and we therefore expect the overwhelming majority of households in countries such as Norway to have NGA connections by 2018. In some countries, rapid roll-out of FTTC/VDSL has boosted incumbent NGA availability to over 80% of households (for example, Belgium). The slow pace of fibre roll-out in France will hold back NGA take-up there. 1 We define NGA penetration as cable, VDSL and FTTH connections (that provide access speeds of 30Mbps or more) divided by the total number of fixed broadband connections. Figure 23: NGA penetration by country, northern Europe, 2009 [Source: Analysys Mason, 2014] 100% 80% 60% 40% 20% 0% Belgium Denmark Finland Ireland Netherlands Norway Sweden UK Figure 24: NGA penetration by country, southern Europe, 2009 [Source: Analysys Mason, 2014] 100% 80% 60% 40% 20% 0% Austria France Germany Greece Italy Portugal Spain Switzerland
Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 61 Executive summary Regional forecasts and cross-country comparison Individual country forecasts About the authors and Analysys Mason
Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 62 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.
Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 63 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.
Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 64 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.
Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 65 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.
Western Europe telecoms market: complete trends and forecasts (16 countries) 2014 Published by Analysys Mason Limited Bush House North West Wing Aldwych London WC2B 4PJ UK Tel: +44 (0)20 7395 9000 Fax: +44 (0)20 7395 9001 Email: research@analysysmason.com www.analysysmason.com/research Registered in England No. 5177472. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher. Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason Limited independently of any clientspecific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only. Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark. Analysys Mason Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Mason Limited shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party.