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19 February 2004 - A new report from Arthur D. Little
(ADL), one of Europe’s premier management and technology
consulting firms and independent brokerage firm Exane,
predicts a revenue increase of 7.5% for European mobile
operators in 2004. The report also states that mobile
operators’ revenue growth will continue at an average
of 6.6% per annum (pa) until 2006, with the majority
of this growth substituting traffic currently carried
on fixed networks.
According to the ADL and Exane report which is entitled
‘Leaders hit back’, voice traffic on mobile
networks is expected to rise an average 7% pa from 2003
to 2010. Despite an estimate that MMS handsets accounted
for 40% of all handsets sold in 2003, this report states
that SMS will represent the bulk of operators’
data revenues until 2006. In 2003, SMS generated three
quarters of ARPU growth and it is likely to continue
to show strong growth in 2004.
“The outlook for the European mobile industry
is positive as we believe significant potential exists
for operators to increase revenue from both voice and
data services,” comments Philip Shepherd, Director
at Arthur D. Little: "Voice traffic and SMS still
remain the key drivers of revenue growth. Despite strong
handset sales, use of MMS services remains sluggish
and it is not likely to make a significant contribution
to ARPU until customers become more comfortable and
familiar with the full potential of MMS.”
Elsewhere, operators are now increasingly focussing
on driving topline growth through investment in services
designed to drive usage and migrate prepaid customers
to contracts. ADL and Exane believe that in 2004 the
major operators will start pushing larger or even unlimited
packages by minimising the need for additional capacity
thanks to yield management and offerings limited to
specific timeslots or locations. This could have a significant
impact on the UK market, where 69% of residential subscribers
use prepaid cards.
Shepherd also describes other trends that are likely
to effect the UK mobile market in 2004, “The UK
is exposed to increasing competitive pressure from the
recent launch of 3 and our forecasts factor in steeper
reductions in outgoing call rates in the UK, to take
account of the additional presence of new Mobile Virtual
Network Operators (i.e. BT Mobile and Tesco). But despite
this increased competition, fundamentally the UK market
remains attractive for mobile operators.”
The report states that 3G rollout continues across
Europe and that 3G services are set to become more widely
available from autumn 2004. Although 3G infrastructure
rollout poses significant strategic, financial and operational
dilemmas for operators, ADL and Exane believe that apart
from the new entrant 3, the impact of 3G will primarily
be in providing additional capacity enabling network
optimisation for the existing operators. In recent years,
the 2G networks of the major operators have hit saturation
point but with the advent of 3G, network capacity will
be significantly increased, enabling the larger operators
to ‘hit back’ against the smaller operators,
which have traditionally enjoyed a capacity advantage.
The conclusions of ‘Leaders hit back’ are
the result of detailed analysis, involving fifty interviews
with senior management of mobile operators, equipment
manufacturers and content and service providers. Copies
of ‘Leaders Hit Back’ are available in French
and English. For a copy of this report or images of
graphs published in this report, please contact Dell
Quinn at EuroPR Group via telephone: 0208 971 6413 or
email:dquinn@europrgroup.com
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