United Kingdom Telecommunications Report Q1 2012
Includes 3 FREE quarterly updates
The Q112 update to the UK Telecommunications Report contains an analysis of market trends and data using the latest data released by fixed-line and broadband providers and mobile operators to the end of September 2011, as well as from the telecoms regulator Ofcom. It also contains our updated and extended forecasts for the fixed, mobile and broadband sectors through to the end of 2016. The report also includes BMI’s operator tables for converged service providers BT, Virgin Media and BSkyB at the end of the internet market data analysis section.
While we forecast continued strong growth in 3G subscriptions, which will increasingly become the norm, increasing to 60.875mn subscriptions in 2016 we now forecast the mobile market will reach 85.597mn subscribers by 2016, with market growth decelerating as the market penetration increases, falling to 1.8% growth pa in 2016. Growth in 3G subscriptions will be underpinned by the consumer demand for smartphone devices. At this stage of market development, changing competitive dynamics and new patterns of revenue generation are becoming increasingly significant relative to subscription growth. The contraction in the fixed-line market will also continue to slow despite an acceleration in 9M11 rate as operators increase bundled service provision.
Vodafone, O2 and Everything Everywhere reported increases in average revenue per user (ARPU) in Q311 going some way to reversing the declines experienced in H111.The pattern appears similar to that of 2010 where there were increases to ARPU levels in H210. Looking ahead, competitive pressures between operators fighting over postpaid subscriptions and seeking to migrate prepaid to postpaid subscribers will place downward pressure on postpaid ARPUs. However, VAS revenue growth and improving subscriber mixes will help to counter the declines stemming from competitive dynamics. Overall, we believe ARPU declines will plateau as we expect growth in data revenue to continue as Everything Everywhere reported 80% of new contract customers signed up to smartphone package in Q211.
BMI calculates that BT continues to lead in the broadband market with 29.2% market share in Q311, up from 27.9% in Q310 as it begins to benefit from fibre roll-out that has proved popular with subscribers. It is also benefitting from its ability to bundle services together, which had previously been denied it by the regulator. Although the broadband market is highly competitive, with the presence of alternative providers TalkTalk, the second largest provider following the integration of Tiscali’s subscribers onto its network, and cable operator Virgin Media, it is BSkyB that has outperformed. Satellite broadcaster BSkyB has reported strong broadband subscriber growth on its network, reaching 3.485mn broadband subscriptions by the end of September 2011, recording impressive 24.4% y-o-y growth, over which time its market share increased from 14.7% to 17%. In addition to a strong competitive environment the UK is also beginning to see investment in next generation infrastructure, a process catalysed by the announcement that BT plans to accelerate the roll-out superfast fibre-optic broadband. Other alternative providers, including O2 and Orange, have reported strong uptakes of their broadband services Meanwhile, the UK remains at the top of BMI’s Western European Telecommunications Market Business Environment Ratings, ahead of France. The UK’s high scores for Industry and Country Rewards are primarily responsible for its position at the top of the table.
The Q112 update to the UK Telecommunications Report contains an analysis of market trends and data using the latest data released by fixed-line and broadband providers and mobile operators to the end of September 2011, as well as from the telecoms regulator Ofcom. It also contains our updated and extended forecasts for the fixed, mobile and broadband sectors through to the end of 2016. The report also includes BMI’s operator tables for converged service providers BT, Virgin Media and BSkyB at the end of the internet market data analysis section.
While we forecast continued strong growth in 3G subscriptions, which will increasingly become the norm, increasing to 60.875mn subscriptions in 2016 we now forecast the mobile market will reach 85.597mn subscribers by 2016, with market growth decelerating as the market penetration increases, falling to 1.8% growth pa in 2016. Growth in 3G subscriptions will be underpinned by the consumer demand for smartphone devices. At this stage of market development, changing competitive dynamics and new patterns of revenue generation are becoming increasingly significant relative to subscription growth. The contraction in the fixed-line market will also continue to slow despite an acceleration in 9M11 rate as operators increase bundled service provision.
Vodafone, O2 and Everything Everywhere reported increases in average revenue per user (ARPU) in Q311 going some way to reversing the declines experienced in H111.The pattern appears similar to that of 2010 where there were increases to ARPU levels in H210. Looking ahead, competitive pressures between operators fighting over postpaid subscriptions and seeking to migrate prepaid to postpaid subscribers will place downward pressure on postpaid ARPUs. However, VAS revenue growth and improving subscriber mixes will help to counter the declines stemming from competitive dynamics. Overall, we believe ARPU declines will plateau as we expect growth in data revenue to continue as Everything Everywhere reported 80% of new contract customers signed up to smartphone package in Q211.
BMI calculates that BT continues to lead in the broadband market with 29.2% market share in Q311, up from 27.9% in Q310 as it begins to benefit from fibre roll-out that has proved popular with subscribers. It is also benefitting from its ability to bundle services together, which had previously been denied it by the regulator. Although the broadband market is highly competitive, with the presence of alternative providers TalkTalk, the second largest provider following the integration of Tiscali’s subscribers onto its network, and cable operator Virgin Media, it is BSkyB that has outperformed. Satellite broadcaster BSkyB has reported strong broadband subscriber growth on its network, reaching 3.485mn broadband subscriptions by the end of September 2011, recording impressive 24.4% y-o-y growth, over which time its market share increased from 14.7% to 17%. In addition to a strong competitive environment the UK is also beginning to see investment in next generation infrastructure, a process catalysed by the announcement that BT plans to accelerate the roll-out superfast fibre-optic broadband. Other alternative providers, including O2 and Orange, have reported strong uptakes of their broadband services Meanwhile, the UK remains at the top of BMI’s Western European Telecommunications Market Business Environment Ratings, ahead of France. The UK’s high scores for Industry and Country Rewards are primarily responsible for its position at the top of the table.
Contents
Executive SummarySWOT Analysis
UK Mobile Sector SWOT
UK Fixed-Line Sector SWOT
UK Broadband Sector SWOT
UK Political SWOT
UK Economic SWOT
Business Environment Analysis
Western Europe
Table: Western Europe Business Environment Ratings, Q112
UK
Industry Forecast Scenario
Mobile
Table: Industry Trends – Mobile Sector, 2009-2016
Mobile ARPU
Table: Industry Trends – Mobile ARPU Sector, 2009-2016
Fixed-Line
Table: Telecoms Sector – Fixed-Line – Historical Data & Forecasts, 2009-2016
Internet
Table: Telecoms Sector – Internet – Historical Data & Forecasts, 2009-2016
Market Data Analysis
Mobile
Table: UK Mobile Market, Q311
Table: Net Additions By Subscription Type
3G
Mobile Contract Wins
Table: Mobile Contract Wins
Mobile Data
Table: UK Mobile Market Overview
Table: O2
Table: Vodafone
Table: Everything Everywhere
Table: Hutchison 3G
Mobile Content
Regional Outlook
Table: Smart Meter Race Is On
UK
Table: UK Smartphone Users (000s) and Smartphone Penetration, Q208-Q210
VAS Timeline
Table: VAS Timeline
Fixed Line
Table: Fixed Line Numbers By Operator, Q409-Q311 (‘000)
Broadband
Table: UK Broadband Market By Technology
Pay-TV
Wireless Broadband
Wireline (Fixed-Line & Broadband) Developments
Table: Wireline Developments, 2008-2009
Table: BT
Table: Virgin Media
Table: BSkyB
Table:TalkTalk
Regulatory Environment
Table: Division Of Regulatory Responsibilities In The UK
Background & Regulatory Bodies
Regulatory Issues
Competition
Regulatory Development
Table: Proposed average Mobile Termination Rates (pence per minute)*
Industry Development
Competitive Landscape
Market Overview
Table: Key Players – UK Telecoms Sector
Table: Selected Operators’ Financial Indicators
Company Monitor
Table: Recent Contracts:
Operator Profiles
BT
O2
Vodafone
Everything Everywhere
T-Mobile (Everything Everywhere)
Orange (Everything Everywhere)
Regional Telecommunications Penetration Overview
Fixed-Line
Table: Regional Fixed-Line Penetration Overview
Broadband
Table: Regional Broadband Penetration Overview
Mobile
Table: Regional Mobile Penetration Overview
BMI Telecoms Industry Glossary
Table: Glossary Of Terms
BMI Methodology
How We Generate Our Industry Forecasts
Table: Key Indicators For Telecommunications Industry Forecasts
Telecoms Business Environment Ratings
Risk/Reward Ratings Methodology
Table: Ratings Indicators
Weighting
Table: Weighting Of Indicators
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