The Dutch mobile services market contracted by 0.7 percent year-on-year in the first quarter of 2017 to EUR 1.2 billion. The continued strong demand for data services and ever-larger data bundles are helping to slow the drop in service revenues, according to the latest Dutch Mobile Operators report from Telecompaper.
Tele2 showed the strongest annual revenue growth in Q1, at 36 percent. While it remains the smallest of the four operators, its market share grew to 4.6 percent in Q1. KPN extended its lead on the market, to a share of 42.8 percent, and T-Mobile also posted a small gain, to 21.4 percent, after stable revenues on an annual basis. Vodafone, which now also includes revenues from Ziggo Mobiel since their merger, saw its revenue fall 6.4 percent, and its market share dropped to 31.2 percent.
The Dutch operators have been working to reduce churn and increase ARPU by offering increasingly large data bundles, 'all-in' tariff plans and multi-play packages. While this has helped slow the drop in service revenue in recent quarters, the market is still not back to growth and more obstacles are coming, such as the introduction of 'roam like home' in the EU and another termination rate cut in July.
As a result, Telecompaper expects the Dutch mobile market to contract by 2-3 percent over the full year 2017, to around EUR 4.6 billion in revenue. Over the five-year period 2017-2021, a CAGR of -0.9 percent per year is expected, to take the market to EUR 4.5 billion revenue at the end of the period.
Not only regulation but also intense competition will drive the drop in revenue. Despite the merger of Vodafone and Ziggo, the Netherlands still counts four network operators and a saturated market. The growing focus on quad-plays by market leaders KPN and Ziggo also will put pressure on mobile ARPU.
In terms of customers, the Dutch market counted 20.3 million Sims at the end of March (excluding M2M), up 1.8 percent from a year earlier. The growth is led by postpaid, while the prepaid segment continues to contract, reaching a share of 28.5 percent at the end of Q1. Telecompaper estimates that the market will grow by around 0.7 million Sims in the five-year forecast period, to around 21 million in 2021.
