2011 Australia - Telecoms Industry - Statistics and Forecasts

Australian telecoms worth $40 billion

BuddeComm estimates that the overall telecoms services revenue passed the $40 billion mark in 2011, reflecting the mildness of the downturn in Australia compared with other countries. However, as has been the case in 2011, growth is likely to remain very subdued in 2012. This is attributable to the continued decline in the fixed-line markets and levelling off of mobile subscriptions, along with reduced pricing from operators attempting to attract increased market share.

Overall fixed line revenues across all operators fell to around $10.5 billion in 2011.

Telstra, Optus and Vodafone

Telstra still dominates the overall Australian telecoms market, although it received just under a 60% market share of overall revenues in 2011, well down from the 80% market share it held in the early 2000s.

Optus’s share of service revenues continues to stagnate between 20%-22%. However its wholesale business had a market shift in 2011 and its growth suggests that, even with a subdued market, Optus’s overall share could surpass 23% by 2013.

The merger of Vodafone and Hutchison, and the subsequent network issues, have contributed to its market share dropping slightly, and the increasing network expansion could see Vodafone return to its previous share of total industry revenue.

2^nd tier market

The second-tier market is making gains in broadband and they are gearing up for IPTV, which will then be bundled into their other product offerings. Although the bundled market often sees overall revenues fall it generally maintains a higher ARPU. Further consolidation is also expected in 2012.

The fixed-voice market revenue is declining in the second-tier market, but so too are mobile and broadband revenues. Falling revenue reflects increased bundle value, as well as consumers moving away from fixed-voice services; however it may also be a symptom of increased reliance on VoIP-based and naked DSL platforms in the second-tier market. Nevertheless overall revenues in second-tier mobile services and data services (including internet access) continue to show growth.

The second-tier telcos’ share of revenue has continued to grow since 2009, being just over 9% of total revenues by mid-2011. It is expected to increase slightly by 2013, to around 12%..

Broadband market

The fixed broadband market in 2011 is still growing and in that year the percentage increase was higher than in the last couple of years. The increase in numbers appears to be coming from the continued drop-off in dial-up customers as they move to a faster and often cheaper service, plus the uptake by newer customers.

Some key factors that have been contributing to the slow growth of this segment – the hardware in Telstra’s exchange limitations – will be removed during 2012 with Telstra’s ‘Top Hat’ program.

Continued strong adoption of services such as Ethernet and private IP in the business data market segment saw revenue growth of around 15% in 2011.

Mobile market

The mobile market, now worth more than $17.5 billion, continues to expand – up 8% in 2011. As well as growth in overall SIOs, mobile broadband grows strongly, reflecting the high adoption rate of mobile broadband data cards, as well as new devices such as the iPad, Android phones and tablets, and new iPhone devices.

Declines in the fixed market limited overall telecommunications market growth in 2010 to just 2.7%, and, with the expectation of further fixed market falls, subdued broadband growth, and the likelihood of intense competition in the mobile market (which will limit ARPU growth), BuddeComm expects overall market growth to be limited to around 1%-1.5% in 2011 and 2012.

Regulatory environment

Telecommunications regulatory reform will continue to feature into 2012 as the Telecommunications Consumer Protection (TCP) Code will see increased pricing and usage monitoring. This will make it easier for consumers to manage their telecommunications costs; if this last attempt also fails service providers will face further regulations.

The other major feature will be the new regulations governing the transitional period between now and the arrival of the NBN. Subsequently other smaller and niche market operators will look for opportunities to capture a greater market share of the telecommunications revenue streams to shore up their returns.

Market Highlights:

• A massive mobile broadband revolution is taking place with more than 5 million people now regularly using mobile to access broadband applications.
• Rapid growth continues in wireless in 2011 as asymmetrical digital subscriber line (ADSL) growth slows down further. However it should be noted that BuddeComm estimates that approximately 90% of all wireless broadband subscribers have more than one broadband plan.
• For the 12 months to end-2010 the annual growth in digital subscriber line (DSL) slowed down to approximately 10%, by which time the market would have reached around 9.7 million broadband subscribers. A further 17% growth is projected for 2010/11 to take the total market to 10.4 million subscribers. The majority of the growth by this time will be coming from the mobile wireless broadband market.
• BuddeComm estimates that in early 2011 there were around 450 provider services, ranging from dial-up through to digital subscriber line, fibre and wireless solutions. Some internet service providers only service small numbers of fewer than 100 users.
• The business market in Australia was quick to embrace broadband, and by 2009 the vast majority of this sector had made the transition. A major reason businesses moved to broadband was for faster speed, yet, according to some studies in 2011, they still suffer from slow speeds.
• In the 2011 financial year Telstra’s total mobile revenue passed $7 billion, with Optus around $6 billion. Vodafone revenue was close to $4.5 billion.
• Total mobile services revenue earned by the major mobile operators in the 2010/11 financial years continues to grow, but at a slower rate than the growth seen in the last years of the previous decade.
• Mobile services now represent considerably more than 50% of overall industry revenues in Australia.
• There are around six million more mobile subscribers than people in Australia. Growth is likely to continue in the foreseeable future as smartphone uptake increases, even though subscriber penetration rates are about 125% of the population. Into 2011/12 the rate of growth may drop below 5%.
• The changing environment of the NBN linked to the digital economy will help the industry double its size to around $80 billion by 2020.

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