Fixed and mobile voice services in Western Europe

13

Forecast

The voice market continues to suffer in the downturn: total retail revenue was down by 3.5% in 2010
Figure 4: Fixed and mobile voice retail revenue in Western Europe, 1Q 20041Q 2011 [Source: Analysys Mason, 2011]

50 45 40

Retail revenue (EUR billion)

35 30 25 20 Mobile Fixed

Overall voice retail revenue remained relatively steady until 2008: increases in mobile spend compensated for decreases in fixed spend. Those days will not return: mobile voice retail revenue will decline at a CAGR of 4.8% between 2010 and 2016 because ARPU will continue to fall and there will be few opportunities for growth in subscriber numbers. Mobile voice service revenue will fall at a CAGR of 6.4% because of decreases to MTRs. Fixed voice service revenue will decline at a CAGR of 6% between 2010 and 2016. Usage will continue to decrease despite discounting, and fixed will account for only 41% of overall voice retail revenue by 2016. Line substitution will be limited during the forecast period, as fixed voice increasingly comes to be viewed as an adjunct to broadband services. The number of fixed voice channels will decline at a CAGR of 2.4%, but the number of fixed voice households will decline only gradually thanks to increasing adoption of VoBB as a primary voice service.
Analysys Mason Limited 2011

15
10 5 0

1Q 2004 3Q 2004 1Q 2005 3Q 2005 1Q 2006 3Q 2006 1Q 2007 3Q 2007 1Q 2008 3Q 2008 1Q 2009 3Q 2009 1Q 2010 3Q 2010 1Q 2011

Fixed and mobile voice services in Western Europe

23

Forecast

Operators will need to make targeted price reductions and watch carefully over the relative value of voice and data
Figure 22: Voice and SMSs share of handset spend, relative to retail revenue per mobile minute, selected markets, Western Europe, 1Q 2011 [Source: Analysys Mason, 2011]

100%
GR

Greater exposure to OTT voice cannibalisation

DK IE FR UK IT DE

Mobile operators should always offer competitive solutions to users voice service needs. However, they will need to make targeted reductions to some prices to remain competitive. Particularly vulnerable call types include international calls, which are often excluded from flat-rate plans, and roaming usage. Operators also need to keep pace with the changing perceived value of voice and data services and adjust relative pricing accordingly. Serious misalignment will prompt customers to consider alternatives for their voice and messaging needs. Tradition voice services exposure to revenue cannibalisation by OTT VoIP services varies significantly from market to market. Some markets have flatter pricing structures than others, and pricing levels vary significantly. The most exposed countries in Western Europe are Belgium, the Netherlands, Spain and Switzerland. Each has relatively high retail revenue per mobile minute and high contributions from voice and SMS to overall mobile spend. They are also characterised by relatively steep pricing.
Analysys Mason Limited 2011

Voice and SMS spend as a percentage of total mobile spend

95%
PT FI SE AT

ES

BE
NL

CH

90%

85%

80%

NO

75%

70% 0.00

0.10

0.20

0.30

Retail revenue per mobile minute (EUR)