The Dutch mobile sector last year again experienced a decline in revenues, down 4.4 percent from 2016, according to Telecompaper’s latest Dutch Mobile Operators report. The combined revenue from mobile services at KPN, Vodafone, T-Mobile and Tele2 amounted to EUR 4.5 billion in 2017. Revenues have been steadily declining in recent years, falling 4.0 percent in 2016 and down 3.3 percent in 2015. The drop accelerated in 2017, but has not yet equaled the 7.5 percent fall recorded in 2014.
The market players attributed the decline mainly to the impact of regulation, price pressure and competition. Vodafone showed the largest decrease in annual revenues and therefore lost market share, while Tele2 bucked the trend and lifted revenues, though it remains the smallest player on the market.
The impact of regulation, mainly Roam-Like-At-Home (RLAH) and the reduction in termination rates, was felt in 2017. This caused an estimated drop in revenues of about EUR 130 million. Revenues also came under pressure from competition on both the consumer market and the B2B environment, from lower out-of-bundle revenues and from the growth in Sim-only sales. This all led to less monthly revenue.
Vodafone loses most revenue, Tele2 NL growing
The mobile network operators together achieved revenues of EUR 4.5 billion in 2017. Tele2 NL was the only one that showed growth, up 29 percent on an annual basis. The relative newcomer remains the smallest of the four MNOs, but managed to increase its market share by more than 1 percent to 5.1 percent in 2017.
Of the three other operators, Vodafone (including Ziggo's mobile revenue) showed the strongest fall in revenue from mobile services, down 10.1 percent. The operator was the only MNO to lose market share, dropping to 30.6 percent. KPN showed the smallest decline (3.0 percent), expanding its market leadership to 43.1 percent. T-Mobile NL revenues decreased 4.4 percent year-on-year, with its market share stable at 21.1 percent.
Revenues to fall to EUR 4.2 billion in 2022
Based on results from the fourth quarter and current market trends, Telecompaper has adjusted its forecast for the next five years. The researcher now expects the mobile market in the Netherlands to contract by about 2-3 percent in 2018, with revenues going down to EUR 4.4 billion. Telecompaper said the market will continue to shrink slightly in 2017-2022, with a negative average annual growth (CAGR) of 1.3 percent, and record revenues of around EUR 4.2 billion in 2022.
This guidance is based on current competition and price pressure conditions and on the expectation that these will not diminish, not even with the possible merger between T-Mobile NL and Tele2 NL that has yet to be approved. The growth in revenues from data and extra services is not enough to completely compensate for the structural decline in revenues from voice and SMS. Another important negative factor that still influences revenue is regulation, with the falling MTA tariffs and continued impact of RLAH. The transparency of mobile costs and the pressure on ARPU due to the bundling of mobile services with fixed services will also play a role.
In addition, the implementation of the IFRS 15 accounting standard on revenue recognition from contracts will start in the first quarter of this year. This will affect handset sales. As a result, ARPUs will only involve mobile services. Tele2 NL has been applying this since its MNO launch in the Netherlands.
