2010 Australia - Mobile Communications - Statistics and Forecasts

Competition for customers driving consumer charges and ARPU lower in 2010-11

The Mobile Market Moving into 2011

In 2011 the mobile communications market in Australia, as in other developed economies, will see a further shift in emphasis from voice to more data-orientated services, driven by more new handsets and applications. Penetration has outstripped the size of the market which indicates that people are increasingly using multiple services and multiple devices.

While voice is still the dominant mobile service in Australia, mobile data has steadily become more popular, spurred on by the advent of smartphones from vendors like Apple and RIM, which facilitate a wide range of data applications and services. However the winner in 2011 will be the handsets based on the Google Android operating system.

Competition is set to intensify between mobile operators, resulting in lower mobile call charges for customers. Telstra has indicated that the gloves are off and that it will vigorously defend its position in the market. This will most likely produce a continued decrease in mobile prices. Furthermore, more customers will reduce their use of fixed-line voice and data services in favour of mobile services.

However over the next five years competition and commoditisation will lead to lower ARPUs.

Industry Overview

Operators are now seeking to provide more services in what has become a saturated market in an effort to increase revenues. The introduction of new hardware and apps such as wireless broadband has become increasingly popular. The three major operators in this area are Telstra, Optus, and VHA which has a relatively small portion of the market.

The arrival of the iPhone has forced the industry to change: rather than controlling the apps market, it has become a broadband infrastructure facilitator. This has created a new growth area in the industry which is based more on infrastructure than on apps or services. Further changes are expected with the industry moving forward into mobile broadband territory.

Subscriber Statistics

There are significantly more mobile services than people in Australia. 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. Growth is being driven by population increases and a rise in the number of people using two mobile subscriptions – one for personal and one for business use.

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 seven million subscribers.

Revenue Overview and Statistics

Total mobile services revenue earned by the major mobile operators in the financial year to 2010 continued to grow, but at a slower rate than the growth seen in 2008/09. This may reflect price competition from the merged Vodafone/Hutchison business.

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 Hutchison (3) in Australia to form VHA. The extent to which new telephony services are developed will influence the pace of revenue growth.

However, it is also possible that strong adoption of new smartphones and data devices (Apple’s iPhone, which has sparked device competition in the smartphone market, and the iPad device) could drive continued growth, particularly in data services, which may offset other factors.

Retail Market

The mobile retail market is rapidly becoming more significant as the use of mobile devices extends well and truly beyond traditional voice and SMS. Retailers are becoming the focus point for interaction with customers, many of whom have individual needs which require a higher level of customer service.

The non-specialist retail market such as food stores and petrol stations are catering for the prepaid market, while the specialised retailers are catering for a rapidly increasing postpaid market. These have now stabilised after a margin squeeze during the 2000s.

Handset Market

The handset market in Australia has seen a shift towards other vendors such as HTC and Apple as the smart phone sector takes off. This sector has previously been dominated by Nokia with its total market share of around 40%, but it still dominates in the low end of the market. In mid-2010 the iPhone 4 was released in Australia.

The charge in mobile broadband usage is being led by smart phones as telcos drop data charges and more users access the internet using a mobile, many for the first time. The initial release of iPhone started the trend, and with competition from the Android operating system the smart phone market will continue to build.

Market highlights:

• The industry as a whole will earn around more than $15 billion in revenue from mobile services - a growth rate of nearly 7% year-on-year. Mobile services now represent considerably more than 50% of overall industry revenues in Australia;
• Sales volumes in the handset market will continue to drop as at mid-2010 sales are 17% lower than 2009 figures, however BuddeComm predicts that iPhone sales will increase in 2010/11 to much higher than in previous years;
• Mobile broadband growth has been extremely rapid since late 2007 and this will also be the main feature of 2011;
• Total mobile services revenue is expected to be above $15 billion in 2011, a growth rate of around 10%;
• In the 2010 financial year, Telstra’s mobile service revenue passed $6.4 billion, with Optus at $4.7 billion. VHA, the entity created with the merger of Vodafone and Hutchison, generating revenue close to $4 billion.

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 Market

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