German mobile revenues drop only 0.5% as operators compensate negative regulatory effects

Wednesday 27 December 2017 | 13:00 CET | Background

German mobile service revenues fell by just 0.5 percent year-on-year to EUR 4.61 billion in the third quarter of 2017, despite the negative impact of regulatory measures such as RLAH in the EU and lower mobile termination fees, according to Telecompaper’s quarterly report on the German mobile market. Telefonica Germany led the fall in revenues, while Telekom Deutschland and Vodafone showed growth. All three operators claimed negative effects from the regulatory measures, while Telefonica was also hit by a decrease in prepaid customers and prepaid ARPU.

Telefonica Germany only operator to show annual drop in revenues

Telefonica Germany was the only operator to report a year-on-year decrease in service revenues, while both Vodafone Germany and Telekom Deutschland reported growth. Telefonica's service revenue fell 3.7 percent year-on-year to EUR 1.34 billion in the third quarter, equal to a 2 percent gain on a quarterly basis. Excluding the effects of the introduction of 'roam like at home' regulation in the EU and lower MTR fees, the annual decrease would have been just 0.1 percent. The main reason for Telefonica’s lower revenues on an annual basis was the drop in prepaid customers and prepaid ARPU, which lead to a 12.2 percent decrease in prepaid revenues to EUR 353 million. Telefonica's postpaid revenues decreased by only 0.1 percent to EUR 991 million, as its new O2 Free plans and promotions for its 15th anniversary helped to increase its postpaid customer base 4.5 percent year-on-year.

Telekom Deutschland reported an increase of 1 percent in service revenues to EUR 1.71 billion. In addition to regulation, Telekom's growth was dampened by more customers taking its fixed-mobile offer MagentaEins and LTE home broadband service, which carry lower prices. Those negative effects were compensated by demand for Telekom’s postpaid mobile offers.

Vodafone Germany also reported annual revenue growth, of 0.6 percent to EUR 1.55 billion in service revenue for the third quarter. The company said growth would have amounted to 2.8 percent excluding regulatory effects. Despite the different performances, the operators' revenue market shares were little changed in the quarter. Telekom is still the largest operator, followed by Vodafone, while Telefonica saw its market share drop to 29.2 percent.

Telekom Deutschland only operator to gain prepaid customers

All three operators saw their customer bases grow year-on-year, despite quarterly decreases at both Telefonica and Vodafone. The quarterly decline was mostly in the prepaid segment for both operators. Telefonica lost 535,000 prepaid customers during the quarter for a total 23.75 million at the end of September. The operator said it saw slightly lower demand from customers on the back of a more complex registration process following the introduction of new prepaid checks in Germany in July 2017. The roam-like-home regulation also impacted demand for short-term use of SIM cards by European visitors.

The prepaid check became mandatory in Germany from 1 July for all new customers purchasing a prepaid Sim card. As the identification can be done via Video-Ident, the negative effect was relatively limited compared to countries such as Belgium, which also introduced mandatory registration this year. Vodafone lost 380,000 prepaid customers during the quarter, ending September with 13.57 million, but its prepaid service revenues were stable at EUR 138 million. Telekom Deutschland won 155,000 prepaid customers to end Q3 2017 with 17.08 million. 

Looking at the total mobile customer base, Telefonica remains market leader with a 38 percent share, despite losing 0.3 percentage points during the third quarter. Telekom Deutschland was still number two with a share of 36 percent, after gaining 0.4 percentage points during the quarter, and Vodafone had 26 percent of customers, down by 0.1 percentage points.

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