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1/
2/
a) Taking the consumers view on digital markets. Its not the 90s anymore
By Daniel Pataki, Director-General, ETNO
p6
p7
c) Note to the new EU leadership: markets have changed, what about regulation?
By Didier Pouillot, Head of Telecom Strategy BU at IDATE
p8
3/ Market trends p10
4/ Revenue and service trends p16
5/ Investment trends p18
6/ Broadband p20
7/ Next Generation Access networks (NGA) p22
8/ Internet usage and revenues p24
9/
3 Market trends
Mobile on the hike
Regarding access, long term trends continue to be valid throughout 2013 and 2014: Mobile is the dominant form of
access, with the number of subscriptions approaching the 800 million mark in Europe. Compared to 2012, the number
of subscribers rose 0.9% to reach 782 million in 2013 and is expected to hit 794 million by the end of this year. Fixed
broadband subscriptions have risen from 157.7 in 2012 to 163.8 million in 2013 and are expected to stand at 170 million
by the end of 2014. The growth rate is slowing down a little as the penetration rate progresses but still reach 3.9% in
2013. Demand for traditional fixed lines has further decreased by -5.5% and -5.2% in 2013 and 2014 respectively. This
means a decline of roughly 10million lines per year, from 189.7million lines in 2012 to 179.3 and 169.9 million lines in
2013 and 2014 respectively. The prolonged growth of the overall number of access lines is definitely a promising trend for
the industry and a lever for a return to growth in the future. ETNOs members are well positioned in these markets. Their
share of 51% and 42% of subscribers in fixed broadband and mobile markets, respectively, across the ETNO perimeter
clearly shows they enjoy a high level of user confidence.
ETNO companies are lead employers
ETNO member companies are also important players in the labour market. Across their collective footprint, ETNOs
members employed more than 625,000 people in 2013, accounting for 79% of total sector employment.
In respect to the different services, revenues from traditional fixed lines continue their long-term decline as ever more
users switch to broadband or abandon their fixed line altogether. Mobile revenues continue to contract despite the evergrowing popularity of mobile broadband services which contributed to ameliorating the growth rate to 1.8% in 2014,
compared to -4.5% in 2013. As in previous years, fixed broadband is the only segment sporting positive growth rates.
From the industrys perspective it is particularly encouraging that growth in 2014 will have been higher than in 2013: while
growth seemed to be flattening out, the risk of it becoming negative seemed quite real.
The investment gap is widening
The European market remains less dynamic in terms of growth and investment than its counterparts in the US and Japan.
However, contrary to the European situation, growth in the latter geographies is slowing down. While it remains solidly
positive in the US with 2.4% in 2013 and an expected 1.8% for 2014, growth became negative in Japan in 2013 with
-0.4% and is to decrease further in the course of this year. The picture is similar with respect to investment. While in
the light of falling revenues, Europes telcos have been forced to slightly scale back their absolute level of investment in
2013, their peers in the US have continued to increase their capital expenditures by more than 5% compared to 2012.
Investments in Japan increased as well, but at a significantly more moderate rate of 0.4%.
10
11
3 Market trends
350.0
+ 1.1% - 2.5%
300.0
4.0%
- 1.0%
- 1.6% - 3.1%
2011
2012
6.0%
- 4.0%
250.0
2010
2011
2007
2008
2012
2013
2013
2014
- 1.8%
2.0%
200.0
0.0%
150.0
100.0
-2.0%
50.0
0.0
2007
2008
2009
2010
2011
Mobile services
2012
2013
2008
2009
-4.0%
2014
Fixed telephony
2009
2010
-6.0%
EU-5
EU-15
EU-28
ETNO perimeter
USA
Japan
+ 0.8%
0.0%
-1.0%
IT services
-2.0%
-3.0%
+ 2.1%
Telecom services
- 0.3%
+0.2%
TV services
EU-5
EU-15
EU-28
ETNO perimeter
USA
Japan
20072008
20082009
20092010
20102011
20112012
20122013
20132014
0.5%
0.4%
0.7%
1.1%
1.8%
-4.4%
-2.3%
-2.5%
-2.7%
-2.5%
-0.7%
-2.3%
-1.2%
-1.2%
-1.5%
-1.0%
1.0%
-1.4%
-2.1%
-2.1%
-2.2%
-1.5%
3.0%
-0.8%
-3.3%
-3.6%
-3.6%
-2.9%
4.1%
0.9%
-5.0%
-4.7%
-4.5%
-4.0%
2.4%
-0.4%
-2.5%
-2.3%
-2.1%
-1.6%
1.8%
-1.0%
- 3.1%
-4.0%
-4.0%
-5.0%
2011-2012
2012-2013
Source: IDATE
12
Source: IDATE
13
3 Market trends
OTT vs. telecom revenue growth (EU-28, %)
2012
2013
25%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%
-12.0%
2007
2008
18%
13%
2017
2018
12%
10%
10%
5%
2011
2012
2009
2010
-5%
2012
2013
EU-15
EU-28
-2.3%
-1.8%
-1.2%
-1.2%
-3.4%
-1.0%
20082009
-7.3%
-7.1%
-5.6%
-5.6%
-10.0%
3.3%
1%
2%
-10%
ETNO perimeter
USA
Japan
OTT
20072008
1%
-1%
-2%
-4%
Telecom
EU-5
EU-15
EU-28
ETNO perimeter
USA
Japan
2016
2017
17%
0%
EU-5
2015
2016
15%
2010
2011
2008
2009
2014
2015
20%
20%
2013
2014
20092010
3.8%
2.5%
0.4%
0.4%
2.3%
-2.6%
20102011
4.3%
3.8%
4.6%
4.6%
2.6%
-4.7%
20112012
0.7%
0.5%
0.8%
0.8%
5.3%
7.5%
20122013
109.6
124.0
135.2
143.5
151.5
157.7
163.8
170.0
664.2
709.3
725.1
736.7
761.7
774.3
781.5
793.8
246.4
236.2
223.0
213.6
201.8
189.7
179.3
169.9
1000.0
-1.0%
-0.1%
-0.4%
-0.4%
5.7%
0.4%
800.0
600.0
400.0
200.0
0.0
2007
2008
2009
Broadband subscribers
Source: IDATE
14
2010
2011
Mobile subscribers
2012
2013
2014
Source: IDATE
15
3 Market trends
Teledensities in Europe
( lines/subscribers per population, incl. Turkey, excl. Georgia, Russia, Ukraine)
140.0%
120.0%
122.0%
119.9%
112.8%
129.6%
100.0%
791.7
80.0%
60.0%
40.0%
41.9%
39.9%
24.4%
20.9%
23.3%
18.6%
20.0%
0.0%
2010
Fixed
37.5%
2011
Mobile
25.3%
22.8%
2012
Internet
29.7%
27.7%
27.2%
2013
627.4
2013
Broadband
0
200
400
ETNO members
600
800
1000
total sector
60.0%
51.0%
50.0%
42.4%
43.6%
46.0% 45.2%
47.0%
43.6%
41.6%
40.0%
30.0%
Total
o.w. fixed
o.w. mobile
20.0%
10.0%
0.0%
EU5
Fixed BB
EU15
EU28
NMS-13
EU-28
ETNO
perimeter
RoW
Total
132.9
66.4
66.6
16.8
5.9
10.9
149.7
72.3
77.5
163.4
81.1
82.3
73.8
17.3
56.6
237.2
98.3
138.9
ETNO
perimeter
Mobile
Source: IDATE
16
EU-15
Source: IDATE
17
793.8
800.0
700.0
600.0
500.0
400.0
300.0
200.0
169.9
100.0
81.0
0.0
2007
2008
2009
POTS lines
2010
2011
2012
2013
2014
Mobile subscribers
VolP lines
24.9
24.0
19.2
23.6
23.0
22.9
22.6
22.3
18.2
17.0
16.5
15.9
15.0
15.1
14.1
10.0
5.0
0.0
2008
2009
Fixed BB
2010
2011
2012
2013
2014
Mobile
Source: IDATE
18
19
5 Investment trends
Investment in fixed and mobile networks
(tangible CapEx, ETNO perimeter, EUR bn)
35,0
30.0
For the time being, European telecom operators are weathering the storm and continue to build new ultra-fast fixed and
mobile access network and upgrade their backhaul facilities despite the tough economic conditions in the market.
European operators have largely maintained their investment levels in absolute (-0.4% in the ETNO perimeter in 2013)
thereby actually devoting more of their resources to new infrastructures in relative terms as the Capex to revenue ratio
increases.
Within the geographic footprint of ETNO, operators have invested EUR 46.7bn in their networks in 2013. As in the preceding
years, the majority of investment is coming from ETNO members, which accounted for more than 59% of total network
CapEx in 2013.
The majority of the funds invested is directed to fixed networks, reflecting notably the cost of civil engineering works
for deploying fibre closer to the end user. Last year, in total EUR 26.3bn or 56% of overall CapEx, were invested in fixed
infrastructure. The companies represented by ETNO contributed EUR 16.3bn to this effort which translates in 62% of total
fixed CapEx.
In the mobile sector, total CapEx amounted to EUR 20.4bn in 2013. ETNO members were also the leading investors in this
segment, with 56% - or EUR 11.4bn - coming from their side.
30.1
25.0
20.0
10.9
11.1
12.3
28.0
11.5
17.4
16.9
28.1
27.0
27.0
27.8
11.3
11.4
19.0
18.5
17.5
19.0
15.0
8.4
10.0
16.1
15.9
17.8
5.0
8.5
0.0
8.1
8.7
16.6
10.0
2011
fixed
mobile
Other operators :
fixed
mobile
9.0
16.3
9.9
2010
2009
9.0
16.6
9.4
8.7
2008
8.5
2012
10.0
2013
2013
40.0
35.0
46.7
30.0
30.1
27.0
30.0
27.0
28.1
28.0
27.8
25.0
20.0
27.8
20.0
15.0
10.0
10.0
0.0
ETNO memberss CAPEX
5.0
0.0
2008
EU-15
Source: IDATE
20
2009
2010
2011
2012
2013
EU-28
ETNO perimeter
Source: IDATE
21
6 Broadband
Fixed broadband connections by technology (ETNO perimeter)
2013
5.9%
3.3%
18.7%
72.2%
DSL
Cable modem
FTTH/B
Fixed broadband vs. mobile broadband take-up (ETNO perimeter, mln subscribers)
Take-up of broadband services continues to progress across Europe. On the one hand there are still new customers
coming to the broadband market, pushing the penetration rate to 27.2 lines per 100 inhabitants in the ETNO perimeter. On
the other end of the market, the transition from legacy broadband to ultra-fast access lines continues. In total we
expect the number of fixe broadband lines to hit the 170 million mark in ETNO territory by the end of 2014.
450.0
400.0
391.2
350.0
300.0
In terms of access technologies DSL is still by far the most common choice. 72% of all broadband access are based on
this technology. However while the total number of DSL subscribers continued to grow, its market share actually fell by 2.5
percentage points in 2013, as competition from cable platforms and fiber-based telecom networks is getting more intense.
Going forward we can expect this trend expect to continue and gather momentum over time.
250.0
200.0
170.1
150.0
3G reached the mass market years ago and will count 391m subscribers at year-end. This represents a very healthy
growth rate of 5.6% in 2014. 4G has clearly moved ahead on the S-curve and has reached the phase of rapid
expansion. In 2012, the ETNO perimeter totalled 3m 4G customers. By 2013 this number had risen to 23m and will
reach 65.5m subscribers at the end of this year. This number remains small compared to the total amount of mobile
subscriptions in the market, but the trend clearly shows that Europe is beginning to realise its catch-up potential in 4G
with the worlds leaders in Asia and North America. The fact that with 4G, for the first time, a wireless technology can really
compete with some of the best fixed-line broadband products in terms of performance, will further boost its adoption,
notably in rural areas where fibre deployment is less likely to happen.
100.0
65.5
50.0
0.0
2007
2008
2009
2010
2011
2012
2013
3G subscribers
2014
4G subscribers
Source: IDATE
22
23
FTTH/B
other FTTx* (incl. VDSL, FTTLA, LAN)
Total EU
ETNO members
% ETNO members
42.4
154.5
20.8
47.9
49.0%
31.0%
NGA Coverage
120.0%
100.0%
80.0%
60.0%
40.0%
20.0%
Albania
Austria
Belgium
Bosnia and Herzegovnia
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
FYROM
Germany
Greece
Hungary
Iceland
Ireland
Italy
Latvia
Liechtenstein
Lithuania
Luxembourg
Malta
Netherlands
Norway
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
Switzerland
Turkey
UK
ETNO perimeter
0.0%
FTTH/B
VDSL
FTTx/D3.0
FTTx+LAN
Source: IDATE
24
Albania
Austria
Belgium
Bosnia and Herzegovnia
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
FYROM
Germany
Greece
Hungary
Iceland
Ireland
Italy
Latvia
Liechtenstein
Lithuania
Luxembourg
Malta
Netherlands
Norway
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
Switzerland
Turkey
UK
(1) : as a % of population
Standard (1)
FTTH/B (2)
na
100%
100%
7%
62%
86%
na
0%
16%
0%
29%
49%
39%
0%
8%
0%
32%
26%
40%
81%
87%
17%
na
0%
36%
61%
na
56%
na
0%
27%
61%
79%
68%
12%
16%
56%
0%
55%
0%
0%
0%
0%
0%
7%
0%
0%
53%
9%
0%
5%
40%
41%
25%
23%
18%
4%
na
23%
55%
2%
11%
100%
0%
94%
0%
80%
na
28%
0%
0%
0%
3%
4%
5%
96%
28%
72%
na
na
0%
37%
0%
19%
96%
24%
19%
36%
54%
6%
40%
na
49%
97%
39%
na
28%
40%
4%
69%
29%
33%
42%
35%
10%
19%
21%
1%
100%
97%
100%
98%
100%
96%
100%
100%
na
100%
100%
98%
98%
98%
99%
99%
na
98%
100%
100%
100%
98%
98%
100%
98%
93%
98%
99%
100%
100%
100%
100%
Source: IDATE
25
92.5%
97.0% 97.0%
80.8%
84.0%
83.9%
87.1%
75.0%
50.0%
25.0%
0.0%
UK
2014
France
Germany
Italy
Spain
2017
75.0%
66.2% 72.0%
68.1% 71.0%
59.1% 60.8%
56.8% 58.5%
75.0%
60.6%
63.2% 65.1%
79.6%
64.3%
50.0%
43.1%
32.9% 36.1%
50.0%
24.7%
25.0%
25.0%
0.0%
0.0%
UK
UK
2014
France
Germany
Italy
Spain
2014
Germany
Italy
Spain
2017
2017
Source: IDATE
26
France
Source: IDATE
27
47.9%
44.5%
40.7%
567
500
507
40.7%
35.9%
35.0%
33.1%
34.6%
28.5%
24.1%
25.0%
424
400
300
243
200
0.0%
UK
156
2014
100
France
Germany
Italy
Spain
2017
0
2012
2013
UK
2014
France
2015
2016
Germany
2017
Italy
2018
Spain
23
22
18
20
18
15
15
10
5
0
2012
UK
2013
2014
France
2015
2016
Germany
2017
2018
Italy
Spain
Source: IDATE
28
Source: IDATE
29
: ETNO Members
Rank
Company
Country
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Deutsche Telekom
Telefonica
Vodafone
Orange
Telecom Italia
BT
Telenor
KPN
TeliaSonera
SFR
Swisscom
Everything Everywhere
Belgacom
Turk Telekom
Virgin Media
Bouygues Telecom
Telekom Austria
Tele2
Portugal Telecom
TDC
Germany
Spain
UK
France
Italy
UK
Norway
Netherlands
Sweden
France
Switzerland
UK
Belgium
Turkey
UK
France
Austria
Sweden
Portugal
Denmark
Company
ATT
Verizon
NTT
China Mobile
Deutsche Telekom
Telefonica
Vodafone
Comcast
Country
USA
USA
Japan
China
Germany
Spain
UK
USA
: ETNO Members
2012 sales (billion )
96976
90798
82583
76608
60132
57061
52373
48700
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
America Mvil
Orange
China Telecom
China Unicom
KDDI
Sprint
Softbank
Telecom Italia
BT
Telstra
Vimpelcom
KT
Time Warner Cable
BCE
Telenor
SK Telecom
KPN
TeliaSonera
SingTel
CenturyLink
MTN
Bharti Airtel
SFR
OI
MTS
Swisscom
Rogers
STC
Telus
Telkom Indonesia
LG U+
Etisalat
Hutchison Whampoa
Rostelecom
Everything Everywhere
Ooredoo
Megafon
Belgacom
Liberty Global
Chunghwa Telecom
Turk Telekom
Mexico
France
China
China
Japan
USA
Japan
Italy
UK
Australia
Russia
South Korea
USA
Canada
Norway
South Korea
Netherlands
Sweden
Singapore
USA
South Africa
India
France
Brazil
Russia
Switzerland
Canada
Saudi Arabia
Canada
Indonesia
South Korea
UAE
Hong Kong
Russia
UK
Qatar
Russia
Belgium
USA
Taiwan
Turkey
46359
40981
39094
29002
28264
26733
26073
23407
21537
18672
16983
16667
16661
14921
13336
11621
11568
11011
10945
10772
10648
10323
10199
9929
9393
9317
9293
9156
8341
8297
8015
7975
7862
7687
7634
6987
6434
6318
5811
5601
5231
Source: IDATE
30
31
ETNO Members
Albania
Austria
Croatia
France
Belgium
Cyprus
France
Ireland
Czech Republic
Germany
Italy
Luxembourg
Romania
Denmark
Greece
Hungary
Latvia
Macedonia
Malta
Romania
Sweden
Liechtenstein
Norway
Slovakia
Switzerland
Poland
Bulgaria
Finland
Iceland
Lithuania
Portugal
Slovenia
Spain
The Netherlands
Turkey
ETNO observers
China
Finland
Saudi Arabia
France
Sweden
USA
USA
USA
USA