GSMA Intelligence predicted that European operators will see mobile revenues return to positive growth in 2017, due to ongoing improvements in the region’s economy and the gradual shift to higher value 4G tariffs.
In a report detailing global mobile trends, the research company predicted that operators in the UK and Germany will begin to register low single-digit revenue growth in 2017, with the rest of the region set to return to a positive trend by 2020, albeit at a rate of less than 3 per cent.
France is tipped to top the growth charts by 2020, with revenue increasing by close to the 3 per cent level. GSMA Intelligence predicted Italy would be the second largest growth market in 2020 at around 2 per cent, placing the market marginally ahead of the UK. Spain and Germany (respectively) are tipped to see revenue growth of around 1 per cent in 2020.
GSMA Intelligence noted that the UK’s decision to leave the European Union has introduced a level of uncertainty to forecasts regarding mobile revenue growth, noting that GDP growth forecasts have been lowered as a result. However, it speculated that UK operators are likely to suffer less than other industries in the country, because the country’s mobile market is one of the most competitive in Europe.
While the financial impact is likely to be mitigated by the competitive nature of the UK market, the company noted that the EU exit leaves “a number of issues to grapple with in pan-regional regulation and in innovation”.
GSMA Intelligence also stated that there were wide variations in uptake of 4G services across Europe as of June 2016. The Netherlands registered the highest proportion of 4G subscribers on 52 per cent, followed by the UK (50 per cent), and France and Spain (tied on 38 per cent apiece). Austria registered the lowest 4G uptake at 11 per cent.
Smartphone penetration as of June was highest in the Netherlands and France on 77 per cent each, followed by Spain (71 per cent), and the UK, Italy, and Austria (69 per cent each). GSMA Intelligence predicted region-wide smartphone penetration will reach 76 per cent in 2020, placing Europe in second place behind North America (comprising the U.S. and Canada) on a global basis.
The research company noted that the use of IP-based messaging apps in Europe is on the up, at the expense of traditional SMS services. Figures covering the year to end-March 2016 showed that use of services including WhatsApp, Facebook Messenger, and WeChat surged by nearly 80 per cent in Spain, around 70 per cent in Italy, and around 65 per cent in Holland. In contrast, SMS usage in those three markets fell by nearly 40 per cent in Spain, and around 30 per cent in Italy and Holland over the period.
However, this trend is not uniform across Europe. In Romania, for example, SMS usage increased by almost 20 per cent despite a near 60 per cent rise in the use of IP-based services. France saw SMS grow by around 5 per cent year-on-year compared to around a 25 per cent rise in IP-based services.
GSMA Intelligence noted that EBITDA margins in Europe rebounded in 2015 to a little over 27 per cent on the back of a recovery in revenue growth and strong cost control by operators.
However, the researchers added that European operators face something of a cashflow squeeze due to investing the bulk of their operating income on capex. Region-wide, operators spent around 17 per cent of operating income on their infrastructure in 2015, leaving typical cashflow levels at around 10 per cent compared to 12 per cent for Asia Pacific operators, and 23 per cent in the U.S.
- see this GSMA Intelligence announcement
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