German mobile market declined last year, 2009 set to be no better

Following a bumper year in 2007, a recent study claims the German mobile market contracted by 0.6 per cent to €19.9 billion in 2008. Even the growth of mobile data services to €438 million failed to compensate for the pricing pressures on voice services.

The two dominant operators, T-Mobile and Vodafone, which together had 70 per cent of the revenues generated within the German market, recorded respective declines (compared to 2007) of 0.3 per cent to 35.4 per cent, and 0.5 per cent to 35.2 per cent. Meanwhile, E-Plus outperformed the market in 2008, mainly in the prepaid segment, helping to increase its overall market share by 1.0 per cent to 15.1 per cent. O2 Germany dropped to fourth place with a 0.1 per cent decrease to a 14.4 per cent market share.

While the number of subscribers increased by more than 10 million last year to 107 million, it is anticipated 2009 service revenues for the German market will come in flat to slightly lower. The short-term negative outlook for the overall economy is not expected to have a large impact on mobile adoption, as mobile is seen more and more as a commodity product, according to the market researchers.

This somewhat gloomy picture follows a glowing report from the European Commission that Europe is the continent for mobile communications. The EC claims the mobile market remained the most dynamic telecoms segment in the EU last year, with mobile phone usage rising from 112 per cent of the population in 2007 to 119 per cent in 2008. However, the leading operators' average market share fell by some 3 per cent last year, indicating a more competitive market. As a result, said the EC, consumers spend more time talking and texting for prices at least 34.5 per cent less than in 2004.

The downward pressure on pricing and a much more competitive market--largely due to increased regulation--probably explains the situation in Germany.

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