Mobile market review: Germany 2009

The German mobile telecommunications services market declined to EUR 4.8 billion in revenues in Q1 2009, down 0.5 percent compared to the same period last year and down 3.7 percent from Q4 2008, according to independent market research firm Telecompaper. The increase in non-voice (messaging and data) revenues of EUR 141 million in the last 12 months was not able to fully compensate for the continued pressure on voice service revenues from cuts to mobile termination fees and fierce competition.

Vodafone and T-Mobile held on to their combined 70 percent share of service revenues in Q1, despite considerable efforts by E-Plus and O2 to win market share. E-Plus was again the one to show the strongest annual growth, mainly in the prepaid segment, helping to increase its share of service revenues by 0.7 percent point to 15.3 percent in Q1. T-Mobile’s market share increased 0.4 percent point to 35.8 percent, while Vodafone lost 1.2 points to 34.5 percent. O2 showed a small increase of 0.2 percent point, good for 14.5 percent of services revenues in the quarter.

In terms of mobile subscribers, the German market lost around 0.3 million in the last quarter, mainly due to Vodafone’s restatement of its prepaid base. Compared to the same period last year, the market added more than 7 million subscribers, for a total of 107 million customers at the end of March 2009. Market penetration rose to 130 percent, from 122 percent a year earlier.

Estimates for 2009’s service revenues for the German market will come in slightly lower than in 2008, forecasting a decline of around 1-2 percent. The short-term negative outlook for the overall economy is not expected to have a large impact on mobile adoption, as mobile is more and more seen as a commodity product. Nevertheless, people will be more careful when prolonging their subscription and may opt for a cheaper package. Also, SIM-only and MVNO sales could see an increase as consumers seek low-cost options.

Having said this, the German mobile data market has enormous potential for growth following massive investments by the four network operators in upgrading networks to support mobile data services. The regulator has anticipated future growth by preparing for fresh UMTS licences in 2009 in the 1.8GHz and 2.6GHz bands, as well as refarming spectrum below 1GHz for use by mobile broadband.

Operators have fast-tracked the development of data-rich applications to improve profit margins as voice ARPU continues to fall in response to competition from resellers and regulatory measures on roaming and termination rates. Mobile TV has not yet caught the public imagination: the national DVB-H licence holder Mobile 3.0 withdrew services soon after launch, partly sabotaged by network operators having introduced handsets allowing users to access free-to-air DVB-T channels.

The following presentation provides key statistics and analysis on the mobile market in Germany in 2009. Enjoy it.

(NOTE 05/10/09: Updates on the 2Q2009 have been included in the comments)

Best regards, CVA

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