Dutch mobile market deteriorates

Dutch mobile market deteriorates

The Dutch mobile industry realised EUR 5.4 billion in service revenues for the full year 2013, showing for the third consecutive time a drop of 6.7 percent compared to 2012. That compares to a 4.5 percent annual decline in 2012 vs 2011 and a 3.8 percent decline in 2011 vs 2010. According to Telecompaper’s quarterly mobile market monitor, the main reason for these annual drops in revenue remains the decline in voice revenue combined with a continuing decrease in SMS revenue. The impact of regulation cuts is estimated at about a third of the total annual drop and declined by about 17 percent compared to 2012. Excluding this regulatory impact (mobile termination and roaming) Telecompaper estimates the annual service revenue drop of mobile network operators to be 4.6 percent instead of the 6.7 percent.

Non-voice services, consisting mainly of data and SMS, are estimated to make up 41.4 percent of total mobile service revenue in 2013, but they are not growing fast enough (particularly in the last quarters) to fully offset the erosion in voice revenues. For the first time non-voice revenues even showed an annual drop of 2.5 percent versus full year 2012, mainly due to a strong double digit decrease in SMS revenues.

Seasonally the fourth quarter is weaker compared to the third quarter and this year’s mobile service revenue decreased 8.6 percent year-on-year to EUR 1.3 billion in the fourth quarter and fell by 4.5 percent compared to Q3 2013.

Telecompaper has updated its five-year outlook for the Dutch mobile industry. Based on the recent quarterly results and current market conditions, we expect the Dutch market to show a decline of 4 percent to EUR 5.2 billion in service revenue over the full year 2014. For the period 2013-2018, the Dutch market is expected to show a negative CAGR of 1.5 percent, reaching around EUR 5.0 billion in revenues in 2018.

The slightly negative outlook for the forecast period is mainly due to expected late effects of the economic slowdown, continued regulation and the impact from the threats of OTT and Wi-Fi. “Besides regulation, also in light with the shift to data-centric customer behaviour, operators will be forced to continue to adjust their tariff pricing in order to counteract the continuous drop in voice revenues and effects of competition,” said Alejandra van de Roer, author of Telecompaper’s quarterly mobile market monitor for The Netherlands.

Looking at the performance of the three mobile network operators (including whole-sale revenues), the report shows that all operators had deteriorating mobile service revenues with T-Mobile showing the smallest annual decline at 5.5 percent. In contrast, KPN showed the largest annual drop in total service revenue in 2013 of 7.7 percent, while Vodafone’s revenues fell by 6.4 percent.

In terms of total mobile SIMs (including Tele2, Ziggo and the rest of MVNOs), the Dutch market saw a small decrease of 1.1 percent annually to 20.5 million at the end of 2013, mainly due to the prepaid base decreasing (particularly at Vodafone and T-Mobile). As a consequence mobile penetration decreased from 123.6 percent in Q4 2012 to 121.8 percent in Q4 2013. For this forecast period we expect total market to increase to 22.7 million mobile SIMs in 2018 (excluding M2M).

Regarding market shares of the MNOs KPN increased its share to 48 percent all SIMs compared to end of last year, mainly due to growth in prepaid MVNOs. Vodafone’s share declined to 26 percent and T-Mobile remained relatively stable at 25 percent. Excluding M2M and MVNOs, market shares look somewhat different with KPN dropping to 42 percent, while Vodafone and T-Mobile increase to respectively 32 percent and 26 percent.

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