If I had to sum up the standout events on the European mobile market, some key words immediately spring to mind: spectrum auctions, LTE or "4G", M&A, European single market, price wars and survival battles. This is far from a comprehensive list, of course, but it provides a flavour of what has shaped the industry in 2013. Many of these trends will continue to dominate the market in the coming year and beyond.
Countries across Europe have been dishing out spectrum licences mostly via auction to help operators build new networks based on long-term evolution. Auction highlights this year include the UK, Austria, the Czech Republic and Norway--for varying reasons.
The UK auction raised what to many would seem a whopping £2.34 billion (€2.80 billion), but it seems that the country's various bodies have learned little from the catastrophic aftermath of the hugely expensive 3G auctions. Ministers complained that the LTE auction achieved a low return, and the UK's National Audit Office has launched an investigation over this.
In Austria, operators are disgruntled about the "bitter pill" they were forced to swallow when new spectrum cost them a combined €2 billion ($2.73 billion). The three operators said they have paid among the highest prices for spectrum in Europe in a market that has among the lowest mobile tariffs in the region.
After the examples of the UK and Austria, the auction in the Czech Republic came as a breath of fresh air. The first effort to auction off spectrum was actually aborted over fears that the bids were getting too high. In November, the auction was finally concluded successfully and T-Mobile Czech Republic, Telefónica Czech Republic and Vodafone Czech Republic are paying a combined 8.5 billion crowns ($422.2 million or €308.6 million) for their licences in the 800 MHz, 1800 MHz and 2.6 GHz bands.
Meanwhile, Norway's auction brought in what few have failed to: a new market entrant. "Mystery" bidder Telco Data--now revealed to be controlled by Access Industries, a holding company founded and chaired by Ukrainian-American billionaire Leonard Blavatnik--paid top dollar to secure spectrum licences, while existing operator Tele2 failed to get its hands on any at all.
Of course the spectrum auctions are all about providing the resources to build LTE networks. After criticisms from various quarters that Europe had fallen behind regions such as the United States when it came to mobile broadband, rollouts and launches started to come thick and fast. LTE is now available from all operators in some of Europe's major markets such as the UK, France, Germany and Spain, while operators in other markets have gradually been ramping up their offers. Adoption is still low, but recent figures from the GSMA predict there will be as many as 1 billion LTE subscribers globally in 2017, of which 20 per cent are expected to be in Europe.
LTE--predictably marketed as "4G" by all and sundry despite the fact that it really is not--is certainly making its mark and is driving the recovery strategies of operators, network equipment manufacturers and handset providers.
Speaking of recovery strategies, 2013 has been the year of battles fought, lost, and ongoing. Nokia lost its fight to keep its devices and services unit after a valiant struggle, and as the world now knows, Microsoft will now take over the unit. For the Finns, it's the end of an era, but Nokia itself gets a new start as an equipment manufacturer thanks to the improved fortunes of Nokia Solutions and Networks, or NSN.
Like its rivals, NSN faces increasing competition from Chinese rivals such as Huawei and ZTE, and this year the Chinese companies have been forced to fend off claims of spying, price dumping, government subsidies and the like. Chinese competition has been far from the only problem facing European vendors such as Alcatel-Lucent, however, which this year launched what CEO Michel Combes clearly regarded as a last-ditch attempt to save the company.
To the surprise of some, Combes' "Shift Plan," which will see costs cut out of the company balance sheet, large-scale job losses and a narrower focus on LTE and IP, seems to be actually working. The latest good news for the company is that it has re-entered France's blue-chip index, the CAC 40. However, the coming months will be crucial for the company.
In many senses, pretty much all equipment manufacturers and operators have been fighting their own battles to survive this year. Faced with the ongoing economic downturn in many markets, regulatory changes, cutthroat price wars and the threat posed by over-the-top (OTT) providers of messaging services that compete with SMS and voice calls, operators have been reconsidering their options.
Popular strategies among many operators include a focus on all-inclusive plans that essentially offer unlimited texts and voice calls and charge primarily for large data bundles as well as inclusive and value-added content. Also on the agenda has been the move towards multi-service plans: companies from Vodafone to Orange have been stepping up their strategies to be able to offer fixed voice, Internet and TV services together with mobile services in one plan--the so-called quad-play option.
Operators are considering various strategies to add fixed assets to their portfolios, ranging from collaboration and wholesale arrangements through to actual acquisitions, best illustrated by Vodafone's purchase of German cable operator Kabel Deutschland.
That leads neatly on to the next major trend this year: mergers and acquisitions. This year has seen some remarkable deals, including Vodafone's $130 billion sale of its 45 per cent stake in Verizon Wireless to Verizon Communications, through to KPN's planned sale of its German E-Plus unit to Telefónica. That deal has yet to go through, and many will see its approval by the German and/or European Union authorities as a watershed moment that could spark a wave of M&A.
The European single market for telecoms
Ah yes, regulation. Neelie Kroes, the vice president of the European Commission in charge of implementing Europe's digital agenda, has often been in the news this year as she pushes forward her vision of a single market for telecoms, including zero charges for roaming and the introduction of net neutrality across the European Union, to name two of the more controversial proposals. Expect to see a lot more on this in 2014, which is also the year that the elections for the European Parliament take place.
There are so many topics I could have covered that helped shape the past 12 months, but I chose the ones that for me have been constant sources of new and interesting developments in the European mobile market, and will continue to be so in 2014. All that remains for me to say is "thanks for reading."
See you next year!--Anne