Houten, The Netherlands, 25 August 2014 - The drop in mobile service revenues in the Netherlands worsened in the second quarter to an 8.2 percent fall on an annual basis. The market continues to feel the effects of the weak economy, driving a shift to cheaper SIM-only offers and low-cost brands. Mobile operators are suffering from lower out-of bundle revenues, as well as regulatory effects and a drop in SMS revenues. According to Telecompaper's quarterly mobile market monitor, mobile service revenues increased slightly compared to Q1 2014, by 1.4 percent to a total of EUR 1.27 billion.
While Q2 is the stronger seasonal quarter and showed slight quarterly growth of 1.4 percent, the annual drop in service revenue accelerated to 8.2 percent from 7.0 percent a year ago, amid a continued fall in voice revenue and a double-digit drop in SMS revenue. While data services are still growing, the fall-off in SMS in favour of IP applications meant non-voice service revenue grew only 1.7 percent year-on-year in Q2. As voice revenue declines, the share of non-voice in total service revenue rose to 44.8 percent in the quarter.
Based on lower-than-anticipated first half results and the current market conditions, Telecompaper has slightly reduced its 2014 full-year outlook and the five-year forecast for the Dutch mobile industry. For 2014, we expect the Dutch market to show a decline of around 7 percent to EUR 5.0 billion in service revenue. For the period 2014-2018, the Dutch market is expected to show a negative CAGR of 2.8 percent, reaching around EUR 4.7 billion in revenues in 2018.
The market forecast is based on the expectation that competition will further intensify and that growth in data revenues will not compensate fully for the drop in voice. Other negative factors include the late-cyclical effect of the continued weak economy and the increasing use of OTT and Wi-Fi services.
"While all the operators report continued growth in data traffic, they have struggled to translate this demand into higher prices and revenues, as consumers remain cautious about their spending,” said Alejandra van de Roer, Research Analyst and author of Telecompaper's Dutch Mobile Operators report. "Tele2’s launch of its own mobile network, new ‘freemium’ MVNOs such as Choozze or FreedomPop and the possible merger of UPC and Ziggo will mean an increase in competition on the market in the coming months, which could put further pressure on prices."
In terms of overall mobile service revenue performance, mainly Vodafone but also T-Mobile increased their market shares at KPN’s expense in the second quarter. KPN lost the most market share on an annual basis. Vodafone increased its market share annually by 1.1 percent points, and T-Mobile gained 0.8 percent points, while KPN lost 1.7 percent points.
In terms of mobile SIMs (including Tele2, Ziggo and the rest of the MVNOs), the Dutch market was relatively stable. The number of mobile SIMs decreased by 0.4 percent annually to 20.4 million at the end of June 2014. As a consequence mobile market penetration decreased from 122.0 percent in Q2 2013 to 121.1 percent in Q2 2014. For the forecast period, Telecompaper expects the total market to increase to 21.8 million mobile SIMs in 2018 (excluding M2M).
KPN increased its share of SIMs to 48 percent in the second quarter, mainly due to growth at prepaid MVNOs on its network. Vodafone’s share declined to 27 percent, and T-Mobile was relatively stable at 25 percent. Excluding M2M and MVNOs, the market shares look somewhat different, with KPN dropping to 42 percent, and Vodafone and T-Mobile increasing to respectively 32 percent and 26 percent.
Note to editors
The report
Dutch Mobile Operators Q2 2014 is based on Telecompaper's continuous research into developments in the Dutch communication services market and looks at Dutch mobile network operators KPN, Vodafone and T-Mobile, as well as Tele2, Ziggo, UPC and other MVNOs. It analyses Q2 2014 results, both revenue and subscribers, and compares the findings with results in the first quarter 2014 and second quarter 2013. A breakdown of postpaid/prepaid and voice/non-voice revenues for each operator is included. The report also provides a five-year forecast for revenues and subscribers on the Dutch market. Single-user price for the report is EUR 495. More information can be found on our website.