EDITORIAL - Australia - Telecoms Industry - Statistics and Forecasts

During 2010 dramatic changes will occur within the Australian telecoms market. The National Broadband Network Company will start to take shape in order to build a nationwide high-speed network based on fibre-optic and wireless technologies. All of this will assist the industry to double its size to around $80 billion by 2020.

A critical issue for the Australian telecommunications industry in 2010 is whether Telstra will be structurally separated into several separate firms in order to promote competition.

There is a strong probability growth in the Australian economy may be fairly slow in 2010 and a smaller probability that growth may even be flat. Investments in the industry are still seriously down. This is likely to translate into stagnant or low growth in telecommunications. However as consumers and businesses scrutinise discretionary spending some telephony and Internet products may become more popular.

The report provides revenue, revenue growth statistics and analysis for the telecommunications market between 2000 and 2009 by major telecommunications provider as well as our market forecasts for 2010/11. Telstra still dominates the overall Australian telecom market with a massive 66% market share of overall revenues. By mid-2010, BuddeComm predicts that Telstra will still have 65% share of the overall revenue market.

The second-tier market is on the verge of massive changes which will occur over the next few years. The critical factors are what changes to the regulatory environment will occur, and even more importantly, how the NBN develops. Second-tier companies are likely to have to reposition themselves. Second-tier firms in Australia are usually virtual service providers to the mass market which purchase services on a wholesale basis from network operators.

A number of second-tier firms are infrastructure operators of networks serving niche markets. Several second-tier firms offer a range of telephony services such as mobile and landlines, as well as Internet access. A second group consists of firms which offer only one type of telephony service such as Vodafone or 3 with mobile voice and data services.

Four of the second-tier players: AAPT, Commander, Vodafone and Hutchison now have annual revenues exceeding the $1 billion mark. The second-tier segment is very interesting in terms of mergers and acquisitions in Australia. In 2009 Vodafone and Hutchison (3) in Australia, the third and fourth largest mobile network operators merged their operations. M2 acquired People Telecom in mid-2009 to create the largest firm without significant infrastructure assets, and further consolidation is expected over the period to 2011.

The total number of broadband subscribers reached 7.3 million by mid-2009, a 17% increase over the previous 12 months. Growth in recent years has been driven by further strong uptake of DSL subscribers, although recent growth has not as strong as the previous two years as the majority of the market has now made the transition from dial-up to broadband. In the longer term the development of a fibre optic network operated by a National Broadband operator is likely to have a significant impact on the take up of DSL or cable based services

The business market has been quick to embrace broadband – by 2009 the vast majority of the business sector had made the transition. Further growth is expected moving into 2010 despite difficult economic conditions in Australia. As business users gradually move to faster broadband access via ADSL2+ and, when it’s built, services from the fibre based national broadband network, businesses are increasingly embracing new broadband applications.

Total mobile services revenue earned by the major mobile operators in the financial year to 2009 surged surprisingly despite difficult broader economic conditions in Australia. The industry as a whole earned around $14.3 billion in revenue from mobile services – a growth rate of nearly 10% year-on-year.

Despite subscriber penetration rates being between 110% and 115% of the population, growth is likely to continue for the foreseeable future though the overall rate of growth may slow slightly.

Between 2010 and 2012 revenue growth is expected to be influenced by the following three major factors. The broader economic environment is perhaps the largest influence and economic growth in 2011 and 2012 could well be subdued in Australia.

Revenue growth will also be impacted because of price competition, especially in light of the merger between Vodafone and 3 in Australia to form VHA. The extent to which new telephony services are developed will influence the pace of revenue growth.

In the financial year 2009 Telstra earned more than $6 billion in revenue from mobile services and Optus earned more than $4 billion for the first time. Vodafone Australia earned just under $2.5 billion and Hutchison just over $1.5 billion.

In 2009 the merger between Vodafone and Hutchison in Australia will create a company with mobile services revenue approximately 5% lower than its nearest rival Optus. This will create an interesting market dynamic for the first time in Australia as VHA may aspire to a gaining market share at the expense of Optus.

Australian operators are likely to have more than 25 million mobile subscribers in 2011 as migration and business adoption continue to drive growth. Growth in the number of services has also been boosted in Australia in 2009 by the effective use of economic stimulus. Telstra continues to dominate the market with more than ten million subscribers, Optus has around eight million and VHA has roughly six million subscribers.

For more info on this new BuddeComm Report see: Australia – Telecoms Industry – Statistics and Forecasts.