mobiles in europe

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www.idate.org Mobiles in Europe Didier Pouillot Head of IDATE’s Industrial Analyses Department Europe Is moving on… Does Europe still have the Wireless lead?

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Page 1: Mobiles in Europe

www.idate.org

Mobiles in EuropeDidier Pouillot

Head of IDATE’s Industrial Analyses Department

Europe Is moving on… Does Europe still have the Wireless lead?

Page 2: Mobiles in Europe

22www.idate.org

The European mobile market today:Ahead of the rest of the world by a hair’s breadth

A penetration rate of 76% mid-2002 (world average 18%, the USA 47% and Japan 56%)

However an ARPU below 30 € (over 50 € in the US, nearing 75 € in Japan)

European market position vs rest of the World

Cellular subscriber base Mobile service revenues

1.03 billion subscribers worldwide 390 billion € estimated for 2002

29%

71%

27%

73%

Source: IDATE

Page 3: Mobiles in Europe

33www.idate.org

The European mobile market today:From now on the N°1 segment in the telecoms services sector

The cellular subscriber base being significantly greater than the number of fixed lines

Revenues which in certain countries (in Italy particularly), represent over half of total telecoms revenues …

Recent trends in the West European market

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mobile revenues/telecom service revenues cellular subscribers access lines

Source: IDATE

Page 4: Mobiles in Europe

44www.idate.org

The European mobile market today:Consolidation under way

The 3 leading European Operators (Vodafone, Orange, T-Mobile) together hold almost half the cellular subscriber base in the region

Operations still in the pipe-line (Telia-Sonera merger, Ben’s takeover by T-Mobile, negociations in progress over Cegetel/SFR…)

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T-M

obile

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nsDistribution of major operators’ subscribers in Western Europe (mid 2002)

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Page 5: Mobiles in Europe

55www.idate.org

The European mobile market tomorrow:Many flies in the ointment (1)

Clear slow-down in subscriber growth since 2001 Difficulties in reversing the downward trend in ARPU The share of pre-paid still remains high, despite operators’ efforts

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Germany UK Italy France Spain NL Sweden

in m

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subscriber base at end 2000 new subscribers in 2001 new subscribers in 1H02

Recent trends in national cellular subscriber bases

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IDA

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Page 6: Mobiles in Europe

66www.idate.org

The European mobile market tomorrow: Many flies in the ointment (2)

Operators’ with healthy operational results (the majority with positive EBIT) …

… however, others somewhat financially shaky (concerning debt levels) and still unsure over their ability to finance 3G investments

(illustration communiquée mardi prochain)

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10%

20%

30%

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50%

60%

Orange KPN Mobile T-Mobile TelefonicaMoviles

TIM Vodafone

1H01 Y2001 1H02

EBITDA/revenues

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Page 7: Mobiles in Europe

77www.idate.org

The European mobile market tomorrow: Many flies in the ointment (3)

Revenues threatened by potential decisions which Regulators could take, in particular to control the tarification of call termination charges (accounting for around 20% of European operators’ revenues in 2001) along with international roaming.

0%

5%

10%

15%

20%

25%

Italy Spain Netherlands Germany UK France

2001 2002 (e) 2003 (f) 2004 (f)

Termination revenue as % of total cellular operators’ revenue

Nota: data are not exhaustive

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Page 8: Mobiles in Europe

88www.idate.org

Mobile networking market Two incompatible 3G standards

UMTS and CDMA 2000 roadmaps are the only IMT 2000 compliant 3G technologies

CDMA 1xRTT appears to be more succesful than GPRS in most of the countries where it has been deployed as at the end of year 2002…

3G2 G

GSM operators(Europe,Americas,Asia)

TDMA-136operators(Americas)

TDMA-136

CDMAoperators(Americas,Asia)

CDMAone

(IS-95)

CDMA1x

RTT

PDCoperatros(Japan)

PDC PDC-P

2,5 G

GSM GPRS

EDGE

W-CDMA

HSCSD

W-CDMA

W-CDMA

CDMA2000

3x

GSMoperators(China)

GSM

CDMA20001x

TD- SCDMA

CDMA (TimeDivisionDuplex)

CDMA DirectSpread

EDGE

GPRSGSM

Source: IDATE

Page 9: Mobiles in Europe

99www.idate.org

Mobile handset market Dominated by the development of electronics consumer markets

Market is willing to standardize its OS: Symbian OS Microsoft mobile PPC 2002 suite edition

3G handset market will be dominated by multiple classes of handsets, designed and integrated by consumer electronics companies

Some network operators can pilot by their own the development of their own handsets (Orange SPV)

Page 10: Mobiles in Europe

1010www.idate.org

The European mobile market tomorrow: However, development prospects also remain (1)

Businesses’ demand for mobile services should enable operators to deploy in a sector which, up till now, was not greatly in demand

Trials with a view to combining different wireless technologies, notably cellulaire/Wifi

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Page 11: Mobiles in Europe

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The European mobile market tomorrow: However, development prospects also remain (2)

Mobile Data Services may also serve more broadly as growth relays for operators, in the same lines as the developments noted in Japan and Korea.

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Billion EUR

SMS person to person SMS application to person PortalsMMS Modem / Mobile office Indirect revenues

Revenues generated by mobile data services, in Western Europe (2000–2007)

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Page 12: Mobiles in Europe

1212www.idate.org

Key Questions

The huge investments in UMTS: Will it be profitable in the end?

Consolidation (national versus European): Will only pan-European mobile players survive?

The Ericsson and Nokia success story: What about the future market share of the mobile networks & handset for the european suppliers?

• Which new mobile applications will gain 30% of the revenues beyond voice services…?

• CDMA1X versus W-CDMA…

• Wi-Fi impact…

• Mobile market fully controlled by network operators versus MVNO’s expansion…

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