Ovum said the popularity of quad-play services in Europe has been damaging for pure-play mobile operators, which tend to be the smallest operators in their respective markets.
According to Mark Newman, chief research analyst at Ovum, latest research from the company indicates that smaller mobile operators often have only 5–7 per cent of the combined national mobile and broadband market. Ovum's analysis of 10 markets includes eight European markets that have -- or had until recently -- four mobile operators.
"Even though most are still growing their share of the mobile market, they are excluded from the big-ticket bundled services and experience higher rates of churn than their competitors because of the relative ease with which consumers can switch mobile providers," Newman said in a research note.
Quad-play, which refers to the tactic of bundling four different services such as mobile voice and data, TV, fixed voice and fixed broadband and offering them as a single package to subscribers, has been adopted with enthusiasm across Europe. France and Spain were among the earliest markets to offer multi-service plans but quad-play offers can now be found in Portugal, the Netherlands, Italy Germany, Greece and many more markets.
Newman noted that convergent offers now account for more than 50 per cent of new business in many European countries. Incumbent operators, which in most cases are the largest providers of retail mobile and retail broadband services, have led the multi-play market for that very reason.
Ovum found that incumbent operators had between 33 per cent and 48 per cent of the combined mobile and broadband markets at the end of 2015 in the 10 countries covered in the Ovum analysis.
"In many cases their market shares have declined since 2000, as a result first of competition from mobile operators and then from the entry of new players into the broadband market taking advantage of local loop unbundling," Newman said.
However, their market shares have started to stabilise in the past two to three years as mobile market growth has slowed, competition has shifted into the multi-play arena, and the number of operators has started to consolidate, he added.
For the pure-play providers, there are few options remaining as the market remains on a convergence trend. As Newman noted, the option to resell fixed services is one option, but building their own TV services is often beyond their financial means.
"Mergers with and acquisitions by rival mobile operators have tended to be the preferred option," Newman said. "In recent years we have seen mobile operator consolidation in Austria, Germany, Ireland, and the Netherlands."
However, efforts to merge two mobile players Denmark failed after the European Commission rejected the deal. CK Hutchison's plan to merge O2 UK with Three UK also looks increasingly in doubt, and the Hong Kong company is also seeking more time to secure the planned merger of Three Italy and Wind Italy.
Meanwhile talks between Orange and Bouygues Telecom recently broke down, Deutsche Telekom is also still mulling what to do with T-Mobile Netherlands, and Telia Company (the former TeliaSonera) is looking to sell Yoigo in Spain.
Nevertheless, some pure-play operators remain bullish in the face of all this convergence: Ronan Dunne, the CEO of O2 UK, said during a television interview at Mobile World Congress in February that there was a good case for a standalone mobile champion" in the UK.
Indeed, he argued that a mobile-focused player would be "essential" to ensure that consumers have "real choice", while other UK operators such as a combined BT and EE increasingly adopt convergence strategies.
- see this Ovum research note
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