The Dutch mobile market contracted by 3.9 percent in 2016 to EUR 4.7 billion, a bigger decline than the 3.3 percent drop in 2015. Vodafone and T-Mobile lost the most revenues and also market share, according to the latest Dutch Mobile Operators report from Telecompaper.
The market suffered from price pressure due to tough competition, as well as falling out-of-bundle revenues. Changes in consumer behaviour, such as the shift to IP messaging and video, and the cuts to EU roaming rates and other regulation also impacted sales.
KPN's revenues contracted the least, thanks to a better performance on the consumer market, and the company strengthened its lead on the market. Tele2 also grew revenues, albeit from a small base, and increased its market share.
T-Mobile's revenue fell by 7.2 percent, giving it a market share of 21.2 percent, and Vodafone's sales were down 6.9 percent in 2016, good for a market of 32.5 percent . KPN's revenue fell only 0.6 percent, leading to an increase in its market share to 42.5 percent. Tele2, which completed its network roll-out in early 2016, grew its market share by 0.4 percent points over the year to 3.8 percent.
Operators are trying to offset the price pressure and reduce churn by offering 'all-in' bundles, multi-play plans and bigger data bundles. While there are some signs of improvement, it's not yet enough for the market to start growing again. Regulation will also remain a source of pain, as EU roaming surcharges end in June 2017.
Market conditions are not expected to improve significantly in the coming years. Telecompaper expects the market to contract again in 2017, by around 3 percent to EUR 4.6 billion. The market researcher forecast a CAGR of minus 0.9 percent over the period 2016-2021, leading to revenue of around EUR 4.5 billion in 2021.
The outlook is based on the expectation that competition will intensify further. The market still counts four operators, despite the merger of Vodafone and Ziggo, and it's unclear where the next spectrum auction in 2019 will lead in terms of consolidation.
Revenues from data services will continue to grow in the coming years, thanks to ever-bigger and unlimited bundles. However, the growth is not enough to offset the structural decline in SMS and voice revenues. The latter will also suffer from another round of upcoming cuts in mobile termination rates and the end to EU roaming charges.
ARPUs will also come under pressure from the increased bundling of fixed and mobile services, which often leads to discounts, and the new rules on greater transparency in mobile phone pricing. All the operators are targeting the fixed-mobile market in order to reduce churn, led by KPN with already 1 million such customers.
Mobile data traffic is still growing in double digits, but growth appears to be slowing, according to the Dutch Mobile Operators report. Operators are struggling to translate the demand for data services into higher prices and revenues. The difficult competition and focus on multi-play packages also leave little room for price increases.
The Dutch market ended 2016 with a total 20.3 million Sim cars, including the four operators and MVNOs but excluding M2M services. The total increased by 1.7 percent year-on-year, led by growth in the postpaid market. Market penetration was up slightly in Q4 to 118.6 percent.
Telecompaper expects the market to add around 0.7 million new Sims in the coming five years, to reach around 21 million in 2021 (excluding M2M).
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