The telecoms market in Europe continued to face macroeconomic uncertainty (particularly in Southern Europe) price-driven competition and further regulatory impacts in 2012. However, some positive stories emerged during the year: mobile data revenue grew solidly and the fixed revenue mix improved further as broadband penetration continued to rise. Machine-to-machine and cloud services are gaining momentum but their share of revenue is still negligible.
This picture masks different performances across countries, services and operators, which we summarise in the next section along with the main drivers. To find out more, Analysys Mason's Telecoms Market Matrix is a comprehensive source of trusted quarterly data that sizes European fixed and mobile telecoms markets and provides market shares for the major players. The March 2013 update of the Telecoms Market Matrix, with data up to the fourth quarter of 2012, is available on Analysys Mason's website.
Mobile: another year of double-digit growth in data revenue
The main trends in the mobile market in 2012 were as follows:
- Worsening performance in Western Europe where retail mobile revenue declined 0.7 per cent in 2012, compared with nearly stable revenue in 2011 (–0.1 per cent). This deterioration was the result of a worse macroeconomic environment--nominal GDP growth was 1.3 per cent in 2012 compared with 3.4 per cent in 2011--and tough competition across most of the services. The growth of mobile subscribers decelerated to 0.8 per cent in 2012, while retail mobile ARPU continued to decline in all countries with the exception of Germany and Norway.
- Improvement in Central and Eastern Europe where retail mobile revenue grew 6.5 per cent in 2012, compared with 0.5 per cent growth in 2011. Even excluding the foreign exchange effects, revenue grew 5.7 per cent in 2012 compared with 4.2 per cent in 2011. Macroeconomic dynamics were more stable than in Western Europe--nominal GDP growth was 9.4 per cent in 2012 compared with 10.5 per cent in 201--and the growth of mobile subscribers was 3.1 per cent, stronger than 0.8 per cent in Western Europe.
- Germany and Norway were the best-performing countries in Western Europe with about 6 per cent growth of mobile retail revenue in local currency. In Germany, the main drivers were better macroeconomic dynamics and the highest data ARPU growth in the region (partially because Germany had lower data usage compared with many other countries in 2011). In Norway, the main driver was the highest subscriber growth in the region (6.9 per cent).
- Turkey and Russia were the best-performing countries in Central and Eastern Europe with 10.9 per cent and 8.9 per cent growth of mobile retail revenue in local currency, respectively, driven by the combined effect of increasing customer numbers and ARPU. Notwithstanding the subscriber growth, Turkey continued to be the country with the lowest mobile penetration rate in Europe at 82 per cent.
- Vodafone's share of retail revenue grew in three of the five Western European countries that generated the most retail revenue in 2012--the UK, Spain and the Netherlands--with the exception of Germany (where its share was stable) and Italy (where its share declined). In Italy, Wind and H3G gained market and revenue share at the expense of the largest two players (Telecom Italia (TIM) and Vodafone).
- Telefónica and T-Mobile were the incumbents most affected in their domestic markets as they lost 3.3 percentage points and 1.4 percentage points of market share of retail revenue, respectively. In France, the growth of Iliad's Free Mobile (3.1 per cent market share of retail revenue in 2012) mostly came at the expense of SFR.
Figure 1: Market share of mobile retail revenue, main players and largest countries, Western Europe, 2011 and 2012 [Source: Analysys Mason, 2013]
Fixed: broadband revenue almost matched fixed voice revenue in Western Europe
The main trends in the fixed market in 2012 were as follows:
- Diminishing pressure on retail fixed revenue in Western Europe as broadband penetration continued to grow and the fixed revenue mix improved further with broadband almost matching fixed voice revenue in 2012 (the ratio was 48 per cent to 52 per cent). Fixed broadband penetration reached 73 per cent in 2012, compared with 71 per cent in 2011, and was the main driver behind the 6.1 per cent broadband revenue growth (ARPU growth was 1.4 per cent). By contrast, fixed voice revenue declined 6.9 per cent, mainly because of a further reduction of the customer base. Overall, retail fixed revenue (excluding business network services and foreign exchange effects) declined 2.4 per cent in 2012, a better performance compared with the 3.1 per cent decline in 2011.
- Broadband growth slowed in Central and Eastern Europe as broadband penetration grew 2 percentage points (from 38 per cent in 2011 to 40 per cent in 2012) compared with a 5 percentage point increase in the previous year (from 33 per cent in 2010 to 38 per cent in 2011). Fixed revenue (excluding business network services and foreign exchange effects) declined 1.3 per cent in 2012, with voice revenue down 4.8 per cent and broadband revenue up 4.8 per cent. Fixed voice is still predominant in the region--fixed voice accounted for 61 per cent of retail fixed revenue and fixed broadband accounted for 39 per cent in 2012.
- The UK, Norway and Belgium were the best-performing countries in Western Europe in terms of retail fixed revenue--more than 1 per cent growth in local currency. The UK had the lowest fixed voice narrowband customer base erosion at about 1 per cent and one of the strongest increases in broadband subscriber numbers at 7.9 per cent. For Norway and Belgium, the main driver of retail fixed revenue was the approximately 6 per cent growth in broadband revenue.
Bulgaria and Ukraine were the best-performing countries in Central and Eastern Europe. Retail fixed revenue in these countries increased by about 10 per cent and 6 per cent, respectively, in local currency, thanks mostly to the highest growth in the number of broadband subscribers (above 20 per cent in both countries). Bulgaria was also the only country where the number of fixed voice lines increased, driven mostly by growing competition from fixed wireless.
Figure 2: Fixed broadband penetration of households, Europe, 2011 and 2012 [Source: Analysys Mason, 2013]
Pablo focuses on forecasting and analysing telecoms markets in Europe and Latin America for Analysys Mason. He worked for five years in strategy and investor relations at Telecom Italia, where he was responsible for European telecoms benchmarking, followed by three years in investment banking as a senior equity research analyst covering telecoms stocks.