Research Notes

The consolidation of the European mobile market has already started

– and will spread to the rest of the world over the coming years.

A little over two years ago we published the first edition of our report about the mobile broadband market Successful Strategies for the Mobile Broadband Market in which we wrote that the mobile broadband market development would be one of the triggering factors that would start a consolidation of the European mobile market.

Just two years later it is clear that our predictions were correct. Across Europe we are now seeing a consolidation of mobile networks that is being driven by the desire to create mobile traffic in a more cost efficient manner.

In practice there are two ways that a mobile market can consolidate. One is by a mobile operator purchasing another operator and merging two networks (traditional consolidation). The other is by two or more operators sharing infrastructure (infrastructure consolidation). Both models improve network efficiency on the market and will either result in improved revenue or help compensate for loss of revenue that is a result of decreasing prices.

Just a few years ago many of the large traditional operators (Vodafone, T-Mobile, Orange and Telefonica) would not even have considered this type of consolidation and would have sworn that building and operating a mobile network was their core competency and the single most important differentiating competitive factor when battling with others to attract the most customers.

Strand Consult has recommended network cooperation to our customers for a number of years and our many analyses of the mobile markets through the years all show that prices on fully penetrated markets decrease faster than traffic can grow. This means that operators will either have to accept lower revenue (which is happening on a number of markets), or alternatively accept some type of consolidation to improve their network economy.

An important question we often hear from the political and regulative authorities is how different types of consolidation will influence competition on the mobile market?  Results from various markets show that consolidation does not have any significant effect on the level of competition on a market.

When we studied countries where one or more operators have left the market (Denmark, Austria, Switzerland, Holland) it was very clear that the level of competition remained unchanged and prices continued to decrease, while at the same time the number of services being offered on the market increased.

When we examine countries where operators have launched – or are just commencing – network cooperations (Sweden, England, Germany, France, Spain and Ireland) we have no doubt that the level of future competition will not only continue unchanged among operators on the market but will even be further fuelled by the many MVNOs that are battling over customers on those markets.

Strand Consult recommends network cooperation rather than traditional consolidation, based on our competitive evaluations and because it is an effective way of extending the period where a number of different networks will compete against each other. In the longer term there is no doubt that the number of European operators will decrease, not so much due to competition, but rather than the EU is working towards Europe developing into one Telco market. Although the EU has yet to discuss whether Europe should for example have many mobile operators or perhaps just two?

In the coming years we will see the European model of strategic network cooperations spreading to other parts of the world. Especially countries with large geographical areas that currently have limited coverage can use various types of network cooperation which will benefit the industry, society and especially the customers.
Our report Successful Strategies for the Mobile Broadband Market describes Strand Consult’s views of the impact of market consolidation and our report How to Succeed in the Second-Generation MVNO Market  describes the MVNO market, how it is developing and how it can influence the level of competition on the market. Please do not hesitate to request more information about these two reports and their corresponding workshops.

More information:

Successful Strategies for the Mobile Broadband Market

How to Succeed in the Second-Generation MVNO Market

Related Reports:

OneAPI – Next Generation Value Added Services in the Mobile industry

Show me the money – The future Business models for mobile Broadband Services

How MVNO´s can get success in the Mobile Broadband market

How media companies can get success on the mobile broadband market

How to get success with Value added services on the Mobile Broadband market

How can a Wimax operator survive in a world full of WCDMA

Contact us to get a copy of the report

Request the report