Fixed–mobile bundling has taken France and Spain by storm: European multi-play forecasts reveal the impact

8 February 2013 Content type: Article
None of the largest European countries will mirror the take-up of fixed–mobile bundles achieved in France, but many operators can learn something from the most successful multi-play bundles.

Major European telcos Iliad, Orange and Telefónica have gained millions of quadruple-play or fixed–mobile bundle subscribers in a very short space of time. Some operators will be able to replicate this scale of success, whereas others will make little impact. Analysys Mason's recently published Report Multi-play services in Europe: forecasts and analysis 2012–2017 highlights the significantly different multi-play futures of European telecoms operators and provides detailed forecasts for fixed broadband-based service bundles in nine European countries.

Figure 1: Bundles that include mobile voice as a percentage of fixed broadband households, European countries, 2009–2017 [Source: Analysys Mason, 2013]


French operator Iliad provides some inspiration, with several million fixed–mobile bundle subscribers in its first year of mobile

Tying a flagship product or service to a larger bundle can attract consumers to the entire service bundle. Operators have achieved some success with this approach by bundling value-added services such as music subscription services, but also by bundling core telecoms services such as mobile voice, as demonstrated by Iliad in 2012.

Iliad launched disruptive mobile tariffs in January 2012 under the Free Mobile brand – an 'unlimited' tariff (with a 3GB per month fair usage limit on mobile data) for EUR19.99 per month and a basic tariff (60 minutes and 60 SMS messages per month) for EUR2 per month. Take-up was significant with several million subscribers taking the service in the first year – a coup in the race to acquire market share ahead of 4G roll-out. Accordingly, Iliad's newly created mobile arm has registered negative EBITDA to date. However, EBITDA losses in that early period were far less severe than financial analyst expectations.

The positive impact of the mobile launch on the operator's core fixed services has been significant. Iliad offered the two tariffs to its fixed customer base at discounted rates of EUR15.99 and EUR0 per month, creating a loose quadruple play of services. The operator reported an increase of 300 000 fixed broadband customers in the first six months of 2012, half of all net additions in the French fixed broadband market in that period and almost three times as many net additions as it had registered in the preceding half year.

Other European countries will gain several million fixed–mobile bundle customers, but nowhere is quite like France

None of the largest European countries will mirror the take-up of fixed–mobile bundles achieved in France – Analysys Mason estimates that 42% of fixed broadband households in France bundled mobile voice contracts with their fixed broadband service at the end of 2012, and this will increase to 75% by the end of 2017.

The particularly high take-up of fixed–mobile bundles in France is the result of:

  • high mobile service prices and lower mobile penetration before disruptive tariffs were launched
  • an operator (Iliad/Free Mobile) finding a business case to make the first move to reduce the profitability of the industry with a disruptive tariff
  • a number of strong converged operators with relatively healthy profit margins that were able to respond pre-emptively to the disruptive player (Bouygues, Orange and SFR all launched fixed–mobile bundles ahead of the launch of Free Mobile).

High market prices have also driven take-up of fixed–mobile bundles in Spain. Telefónica signed up 1 million customers to its Movistar Fusión fixed–mobile bundles between October and December 2012. As a result, around 21% of fixed broadband households in Spain bundled mobile services at the end of 2012. This will increase to 42% of fixed broadband households by 2017.

Fixed–mobile bundling in other major European countries will not follow quite the same growth curve – around 20% of fixed broadband households in the Czech Republic and Romania will bundle mobile voice services by 2017 – countries where the largest fixed broadband provider has already embraced fixed–mobile bundling and at least one other operator has introduced non-disruptive service bundles.

We expect Germany, Poland and the UK to have fixed–mobile bundle penetration of around 10% of fixed broadband households at the end of 2017. A single operator will mainly drive the fixed–mobile bundling agenda in these countries (although other players have also launched services with limited impact).