Australia - Analysis Telecom Market - mid 2012

Synopsis

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 remains 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 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.

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 happening 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%.

The fixed broadband market in 2012 is still growing and last 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.

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.

This report provides analyses of the major developments in the various sectors of the industry as they are occurring in Australia and indeed around the globe.