2007 Australia - Telecoms Industry - Statistics and Forecasts

This report provides revenue, revenue growth statistics and analysis for the telecommunications market by major service between 2000 and 2007, as well as our market estimates for 2008 and 2009. The total telecoms service market is segmented according to telecommunications service: local access, mobile and data, as well as by major provider (Telstra, Optus and other providers). Detailed revenue and forecasting statistics and analyses are also included separately for the wholesale, mobile, data and broadband markets, with forecasts for 2008/09. Higher level forecasting is also provided to 2015.

BuddeComm estimates that the overall telecoms market grew by 5.2% to $36.6 billion in the 12 months to June 2007. Growth is expected to subside over the next two years as Telstra is forced to begin a period of transformation and rationalisation that has already been evident in many European countries. Overall telecoms market growth is expected to drop to 4.1% by 2008 and 3.4% by 2009.

Telstra maintains its stranglehold on the wholesale market with revenues of just under $3 billion in 2007, which constituted just over 70% of the $4.2 billion wholesale market. The total 2nd tier market (including wholesale revenues) grew at around 7.9% in 2007 to $9.2 billion and we expect that the growth rate will drop slightly to around 6% in 2008 and then maintain this level moving into 2009. For more information, see chapters 4.2, page 23 and chapter 9, page 60.

Industry overview

• Telstra’s Retail broadband subscribers jumped 60% to 2.4 million, and market share increased from 45% to 47%. In fact, retail broadband for the first time exceeded the dollar decline in PSTN revenues. For more information, see chapter 5.2, page 30.
• Optus is the follower that must challenge the incumbent. It is starting to feel the pinch of a mobile market that has almost reached the point of saturation, local access revenue is declining and it has been slow in its broadband push.
• After some very tough years the 2nd tier market is finally turning the corner, although still struggling. Regulations are finally started to fall in place that are providing the market with an economic viable wholesale platform. For more information, see chapter 5.4, page 34.
• With good wholesale prices in place, by late 2007 the industry has increased the number of lines which they now operate independently from Telstra.
• The key drivers here are players such as Optus, PowerTel, iiNet and Internode. Within the next few years we will see broadband access becoming near universal, either through fixed or wireless connections. This will lead to further commoditisation and will see more consolidation.
• While WiMAX will in the short term not have a major impact on the overall market, wireless broadband developments in regional markets and in niche metropolitan markets will certainly also allow for innovations and expansion.

Fixed line and data

• The fixed-line voice market (voice calls and local access) has been losing overall market share over the past few years and by 2009 BuddeComm expects the fixed-line voice market to drop to just 28% of the overall market. For more information, see chapter 4.1, page 22.
• The data market continues to outpace other segment in terms of growth and market share. Up to 2006, mobile was the key driver of growth of the overall telecoms market; however, as the market is rapidly approaching saturation, growth has already begun to subside in this sector.

Mobile

• Growth in mobile subscribers is slowing and ARPUs have been steadily declining over the past few years; however, by 2007 ARPUs across all operators had stabilised, driven in part by the take-up of higher spending capped plans and increased mobile data usage. For more information, see chapter 10, page 75.
• In addition to a market that has almost approached saturation, operators’ revenue growths will be modest from 2008 onwards. Growth was around 8.5% for 2006 and 10.3% in 2007 and we expect this to gradually taper off further to around 7.2% in 2008 and 5.0% in 2010.
• Subscriber growth reached 7% in 2007 and we predict that growth will subside to 4% in 2008 and reduce further to only 2.0% in 2010.

Broadband

• Internet access revenues (dial-up and broadband) showed very strong growth in 2006 and 2007 driven by strong uptake of broadband. For more information, see chapter 11, page 94.
• The revenue growth rate for 2006 was 27% compared with 33% in 2007. Strong growth is expected to continue moving into 2008, although the market probably has peaked in 2007.
• Telstra is expected to increase its overall market share of Internet access revenues moving into 2008, extending its market share from 36% in 2007 to 39% in 2008.
• By late 2007 there was still pent-up demand for another 1 million users and by 2008 broadband penetration in Australia will cross the 5 million mark.