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Frost & Sullivan’s Profiles Of European Mobile Operators -
Competitive Positioning And Strategies Leading To 3G
MOBILE MARKET FACES IMPENDING SHAKE-UP AS UNCERTAINTY
PREVAILS IN THE LEAD UP TO 3G
 Uncertainty clouds the future of the European mobile telecommunications industry despite reassurances
from key players in the market. Concerns surrounding the delays in the rollout of 3G networks, company
debt burdens and the speed of development of new services have raised the level of unease within the
industry. It is increasingly evident that the make-up of the market is set for a radical transformation.
This is the view of a recently published report by Frost & Sullivan, the international marketing consulting
company, which is based on detailed profiles of 35 mobile network operators across ten European
countries.
The mobile telecoms industry has witnessed massive growth in recent years, with the subscriber base
across the selected region increasing by over 250 per cent since 1998. Operators have been convinced
that fortunes are to be generated through the take-up of next generation mobile services. This belief led to
astronomical sums being paid for 3G licences and several operators have now admitted to paying
substantially more than they had planned.
The market for mobile voice communication is expected to reach maturity by 2004. In addition to this,
existing mobile operators will face increasing competition from new entrants with 3G licences as well as
from virtual network operators. Ben Donnelly, Mobile Telecoms Analyst at Frost & Sullivan, comments: “In
order to succeed in this market, it will be imperative for operators to retain customers and thereby reduce
churn. This will be achieved by offering innovative and differentiated service portfolios and, for example,
increasing emphasis on customer care and support.”
With the market for voice telephony approaching maturity, operators are desperate to reverse the decline
in average revenue per user (ARPU), which has decreased by as much as 43 per cent in some countries.
“They plan to do so through a dramatic increase in usage of data services, which currently account for an
average of only 7 per cent of revenue,” Ben Donnelly continues. The industry is hoping that, once the
technological teething problems are overcome, the popularity of data services will mirror that of SMS. The
most optimistic operators expect data revenues to overtake voice as early as 2004.
Allison Webb, co-author of the study, explains that the development of data services has been driven more
by operator enthusiasm than by market demand. “Most European countries have already allocated their
3G licences. The exorbitant costs that some operators have paid highlights their commitment to the
development of these services, and the belief in their ability to recoup enormous investments despite as
yet undetermined business models and revenue streams,” she reports.
The acquisition of 3G licences has been central to operator strategies, although the early excitement over
the revenue potential has become somewhat subdued. The accent has now shifted to recovering the vast
expenditure and avoiding credit rating downgrades. “Several operators were forced to withdraw their bids
due to the financial risks and potentially large debt burdens being imposed upon them,” Allison reports.
“There are still several unresolved issues surrounding 3G such as the timeline for introduction, handset
design and availability, consumer acceptance, and pricing structures. However, each of Europe’s largest
operators have obtained at least one 3G licence and network development is at the forefront of their short-
term strategies.”
It is expected that the five largest operators - Vodafone, T-Mobile International, the Orange Group,
Telecom Italia Mobile and BT Wireless - will maintain their dominance. However, analysis of their
strategies raises some interesting conclusions which are represented by the forecast shake-out in their
market positions, with some leading incumbents losing share to more dynamic and visionary rivals. Pan-
European consolidation is also acknowledged to be a major trend over the next few years, and suitable
partnerships are highlighted in the report.
In spite of the gloomy outlook, there is hope for the industry. Ben Donnelly comments: “There is enormous
potential for success if the operators move fast and act on redefined success factors. The winning
operators will be those with, for example, a thorough and accurate understanding of what services the
market actually wants, and the ability to market these services effectively.”
Frost & Sullivan conducted over 60 interviews with operators in Denmark, Finland, France, Germany, Italy,
the Netherlands, Norway, Spain, Sweden and the UK. In addition to the detailed company profiles, the
report includes in-depth analysis of company strategies, national market overviews, comparative analysis
of the overall market situation, discussion of the key market issues, and subscriber and revenue
projections to 2004.
Operators under analysis in this study include Mobilix, Sonofon, Tele Danmark, Telia Denmark (Denmark),
Radiolinja, Sonera, Telia Finland (Finland), Bouygues Telecom, Itineris, SFR(France), E-Plus,
Mannesmann Mobilfunk, T-Mobil, Viag Interkom (Germany), Blu, Omnitel, Telecom Italia Mobile, Wind
(Italy), Ben, Dutchtone, Libertel, KPN Mobile, Telfort (The Netherlands), Netcom, Telenor Mobile
Communications (Norway), Airtel, Amena, Telefonica Moviles (Spain), Europolitan, Tele2, Telia Mobile
(Sweden), BT Cellnet, One2One, Orange and Vodafone (UK).
About Frost & Sullivan
Frost & Sullivan is a customer-focused marketing consulting company with a long
history. We have evolved from a company that focused on publishing market reports
into a full-service training and consulting company.
In that process we have greatly expanded our services, the size of our staff, and the
number of our offices worldwide. Our relationship with our customers grows stronger
every day in both our marketing consulting and training services. This greater
responsiveness results from:
- Shifting our products and services to address specific customer needs,
challenges, and problems
- Spending more time directly with clients-at trade shows, at conferences, in our
world offices, and in their offices
- Monitoring all key markets continuously to help our clients become more market-
focused and proactive in the marketplace
- Adding a Research Services Group to handle all your inquiries, feedback, quick
research needs, online searching, and report clarifications.
About The Report
Report Code: 3923, Publication Date: March 2001, Price: 7,000 Euros
For further press information, please contact
Frost & Sullivan's Public Relations Department
Tel. +44 (0) 20 7343 8376 or Fax. +44 (0) 20 7343 8380
(kristina.menzefricke@fs-europe.com)
For Information in the United States, please contact
Kristi Grier
Media Relations Executive
CIT
Frost & Sullivan
Tel. 210.247.2403 or Fax 210.348.1002
Kgrier@frost.com
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