KPN remains biggest provider on shrinking Dutch business telecom market

Monday 29 January 2018 | 14:57 CET | Background

Revenues on the Dutch business telecom market keep contracting, driven by lower revenues from mobile, fixed telephony and data services. KPN is still the biggest player, with a market share over 50 percent, helped by a number of acquisitions. The planned merger of T-Mobile and Tele2 Netherlands will create a third large player, but with a combined market share of just under 11 percent, the new company will remain well behind number two VodafoneZiggo (>27%). Telecompaper expects more consolidation in the market in the coming year, among smaller players and through acquisitions by KPN and VodafoneZiggo, while the market turns to IoT as the latest hope for revenue growth. 

The total revenues from business telecom services (mobile/fixed telephony and broadband as well as data services) fell by 8.9 percent year-on-year to EUR 669 million in the third quarter of 2017, according to Telecompaper's Business Market Insight report. Mobile services accounted for just over half of the market, but were down slightly to 51.3 percent of revenues from 53.6 percent a year earlier. 

Mobile data services, such as for laptops, fell by only 2.4 percent to EUR 41 million. The much larger mobile voice and data category registered a drop of 13.8 percent to EUR 302 million. The main reasons for the sharp fall were the negative impact of regulation and growing price pressure from intense competition. 

Fixed broadband was the only category to show annual growth in Q3, of more than 4 percent to EUR 72 million. Revenues from fixed telephony fell 7.6 percent to EUR 146 million, and data services were down 6.9 percent to EUR 108 million. 

KPN market leader with double share of VodafoneZiggo

KPN, including its various sub-brands such as Yes Telecom and Telfort Zakelijk, is by far the market leader, accounting for 51.7 percent of business revenues in Q3. That's an increase of 0.2 percent from the same period in 2016. The incumbent's organic revenue decline was compensated partly by takeovers such as Dekatel (Q3 2016), VrieService (Q1 2017) and Solcon (Q2 2017). While KPN increased its market share, its underlying revenues were still down 8.7 percent, with both mobile and fixed showing lower sales. In addition to acquisitions in the traditional telecom market, KPN has acquired a number of companies in related services, such as security and cloud services.

VodafoneZiggo was a distant number two on the business market, with a market share of 27.4 percent. That's less than the combined share of Vodafone (24%) and Ziggo (3.8%) in Q3 2016. The merged group's revenues were down 9.8 percent in Q3, mainly due to mobile, the same as KPN. 

T-Mobile/Tele2 still small

The proposed merger of Tele2 and T-Mobile Netherlands will also have consequences for the business market. T-Mobile had 6.6 percent of enterprise revenues in Q3 2017, down by 0.2 percent points from a year earlier. Tele2’s market share was up 0.1 points over the same period to 4 percent. Both operators showed lower revenues, with a 6.9 percent fall at Tele2 and 12 percent drop at T-Mobile. 

Their combined market share is 10.6 percent, leaving them still well behind KPN and VodafoneZiggo. At the same time, they will be less dependent on mobile revenues than the current situation at T-Mobile. The latter generates 99 percent of its enterprise revenues from mobile, while Tele2 gets almost 80 percent from fixed services. Together, the two would have 69 percent of business revenues from mobile and 31 percent from fixed. 

Trends: consolidation, more revenue from M2M/IoT

In addition to takeovers by KPN and the T-Mobile/Tele2 merger, a number of smaller business telecom/ICT providers are consolidating their positions in the Netherlands. Voiceworks acquired Xenosite, Claranet strengthened its position with three takeovers, and Zetacom recently acquired Creaforti.

The consolidation trend will continue in the coming years, with VodafoneZiggo and T-Mobile/Tele2 also expected to take part. All the operators are also betting on IoT services to take off in 2018, helping to compensate some of the revenue loss in traditional mobile services. 

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