Tele2 performs well in declining Dutch mobile market, Vodafone top loser in Q2

Thursday 7 September 2017 | 08:56 CET | News
The Dutch mobile services market fell 1.9 percent in the second quarter, to reach EUR 1.14 billion in revenues, with the decline accelerating sequentially. Normally, the April-June period generates higher sales than January-March. This year, however, there was no quarter-on-quarter growth, as revealed by the latest Dutch Mobile Operators quarterly report from Telecompaper

Of the four mobile operators with their own network (MNOs), Tele2 Netherlands scored the best: 43 percent year-on-year revenue growth. The relative newcomer remains the smallest of the four MNOs, but increased its market share to just over 5 percent in Q2. KPN remained stable and expanded its market lead to 43.2 percent. 

T-Mobile Netherlands recorded a small sales decline (-1.3%) and remained relatively stable at 21.2 percent market share. Vodafone Netherlands, which now also includes the mobile revenue of merger partner Ziggo, saw a strong sales decline of 9.6 percent. This led to the only loss of market share among the four MNOs, to 30.5 percent. 

Again no sales recovery in Q2

For the second year in a row, there was no traditional seasonal growth in Q2 compared with the first quarter. In fact, sales decreased by 0.8 percent sequentially. Operators attributed the decline to pricing pressure and competition. More specifically, there was a negative impact from: 

  • less revenues from outside the bundle;
  • regulation, such as the recent reduction of roaming tariffs in the EU;
  • changing consumer behaviour;
  • discounts on mobile with bundled offers.

The impact of the abolition of retail roaming tariffs in the EU as of 15 June 2017 will continue to be felt by operators. The recent reduction in mobile termination charges will also play a role over the next three years. 

Revenues continue to decline: EUR 4.4 billion in 2021 

Based on the results from the previous quarter, Telecompaper has revised its expectations for the next five years. Mobile revenues in the Netherlands are now expected to decline by about 3 percent to EUR 4.6 billion this year. 

The market researcher expects the market will continue its gentle fall in 2017-2021, with a negative average annual growth rate (CAGR) of 1.4 percent. By 2021, mobile sales will amount to EUR 4.4 billion. 

Telecompaper based its guidance on the expectation that competition will continue to intensify in the future. The merger between Vodafone and Ziggo has not led to less mobile operators. Four MNOs remain active in a stagnant market. Other important negative factors for the coming years are: 

  • regulation with the newly published MTR rates from regulator ACM and the abolition of EU roaming;
  • transparency of mobile costs for customers;
  • the pressure on ARPU due to the combination of mobile services with fixed services.

Mobile data traffic is still growing in double digits, with even a slight acceleration in the last quarter. Operators are struggling to translate the demand for data services into higher prices and sales, but the strong competition and focus on multi-play packages are also leaving little space for manoeuvre.

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