Austria - Spectrum auctions and LTE strategies

Telecom Investment Research Note

Synopsis

Austria’s mobile phone market is served by four established Mobile Network Operators (MNOs), and several MVNOs and resellers. Market revenue has steadily fallen since 2006, and is likely to remain at about €3.31 billion for 2010 – relatively unchanged from 2009 – as MNOs bear the brunt of the 10% drop in mobile termination rates (MTRs) imposed by the regulator, the continuing implementation of the European Union (EU) Roaming Regulation, which has been extended to 2013, and the falling cost of mobile voice minutes and SMS services as operators lower rates in response to competitive pressure.

In terms of call minutes, the mobile sector now exceeds that of the fixed-link networks. In 2010 mobile networks are expected to carry about three times the traffic of fixed networks. However, mobile data traffic will remain constrained until at least 2011 given the comparatively high cost of high-end data transfer for consumers. The risk of restrictions for consumers in data use as seen in 2010 (with unlimited data packs being replaced by data caps), resulting from demand for data meeting network capacity limitations, will be eased during the next two years in response to the recent auction for 2.6GHz spectrum and the development of upgraded networks based on LTE technology. Indeed MNO investments in the mobile sector, amounting to about €510 annually, is largely focussed on spectrum licensing and software upgrades, given that the bulk of 3G build has been completed – 3G coverage now reaches about 95% of the population.