2009 Australia - Mobile Communications - Market Trends and Surveys

BuddeComm’s Australia - Mobile Communications – Market Trends and Surveys annual publication provides information and insight into the mobile communications sector in Australia with a particular reference to mobile voice services.

The report provides an overview of the major mobile operators in Australia, as well as analysis of trends and industry developments in 2009.

Australia has three mobile network operators – Telstra, Optus and VHA. VHA was formed in mid-2009 following a merger between the third and fourth-largest mobile network operators in Australia, Vodafone Australia and Hutchison Australia, which provided services under the brand ‘3’.

Voice is the dominant mobile service in Australia, but mobile data has become steadily more popular since 2007. Growth in use of mobile data services was extremely rapid in 2008 and 2009, and this trend is expected to continue in 2010. Browsing the mobile Internet from a handset is in its infancy in Australia relative to other advanced economies.

All the major mobile providers have recently completed upgrades to their mobile networks based on HSPA technologies. High-speed mobile broadband coverage has also been expanded to many regional centres in Australia in 2009.

Market penetration for mobile services in Australia is above 100% due to some individuals having more than one mobile subscription. In 2009 there were roughly 25 million mobile subscriptions in Australia for a population of around 22 million individuals. The country’s mobile industry will generate roughly $15.5 billion in revenue in 2009.

Key highlights:

·The mobile industry in Australia has changed significantly with the merger of the third and fourth-largest mobile network operators Vodafone and Hutchison Australia to form the company VHA. The merger will fundamentally alter the competitive landscape for the industry. If VHA is successful in the longer term the company may challenge both Optus and Telstra in an effort to become the largest mobile service provider in Australia, as Vodafone already is in New Zealand and many other important markets.

·There is a small chance that Australia’s economy may enter a recession in 2010, or more likely growth will be fairly flat. This may translate into falling demand for certain telecommunications product and services. However, as consumers and businesses scrutinise discretionary spending some telephony products may become more popular. The migration of mobile subscribers to capped plans may accelerate, especially among the high spending consumer and business segments.

·Growth in the overall number of services is also driven by net migration of people to Australia. The ABS estimates that net migration to Australia in 2009 and 2010 is roughly a little more than 200,000 people per year. Growth in the number of people using two mobile subscriptions is also driven by increasing business usage. Very few individuals need more than one mobile service but an increasing number of business people are being equipped with handsets. As a result, BuddeComm estimates that the overall market may increase by between 300,000 and 400,000 new business connections in 2010.

·         In the first half of 2009 Telstra and Optus outperformed Vodafone and Hutchison. However it is likely that this has been at significant cost in terms of acquisition charges. In the second half of 2009 and 2010, BuddeComm expects that Telstra and Optus will retreat in their all-out attempts to acquire customers, while VHA will market itself aggressively in a bid to increase its market share.

·         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. Revenue growth slowed sharply in the first half of 2008 perhaps even turning negative as consumers reduced discretionary spending in the early stages of the global financial crisis. Growth for the full financial year was around 3%. In 2010 the mobile industry as a whole is expected to earn more than $15 billion for the first time. Revenue growth is likely to be moderate at around 5% unless economic conditions become significantly worse, perhaps as a result of a second financial crisis.

·         The mobile retail market in 2009 continues to be dominated by vertically integrated retail chains which are directly affiliated with a single major mobile operator. In addition to the operator branded stores a large number of smaller retail chains and independent mobile retailers continue to compete. As economic conditions have worsened in 2009 consolidation among retailers has occurred and many retail operators have closed.

·         The handset market in Australia is dominated by Nokia, which commands a market share of around 40%, with a number of smaller vendors all maintaining market shares of between 10% and 15%. However, in 2009 these dominant vendors face increasing competition from smaller competitors such as HTC and Apple. Due to a difficult economic climate generally in Australia growth in handset sales in 2009 and 2010 is expected to be minimal, despite a short-term boost to sales from the government’s economic stimulus packages in early 2009.

This annual report provides the reader with a through overview of the mobile communications market in Australia in 2009 and shares important analysis of the market in 2010 and beyond.

Please note that while this publication does discuss mobile data to a degree, it is predominantly focussed on mobile voice services. Mobile data is focussed on in a separate annual publication: Australia - Mobile Broadband and Media, which is available from the BuddeComm website.

Data in this report is the latest available at the time of preparation and may not be for the current year.