Cell Phone Markets: Comparing Us & Europe
This document was uploaded by user and they confirmed that they have the permission to share it. If you are author or own the copyright of this book, please report to us by using this DMCA report form. Report DMCA
Overview
Download & View Cell Phone Markets: Comparing Us & Europe as PDF for free.
More details
- Words: 1,365
- Pages: 4
March February 2008 N° 7
Vision
The Quantifica Newsletter
OMSYC is now QUANTIFICA. On January 1st 2008, OMSYC (World Observatory Of Communication Systems) became Quantifica.
Comparing the European Union 15 and American cell phone markets Asmaa Zaher, Analyst. Data used to write this article come from the Quantifica database at www.quantifica.fr.
Americans use their cell phones four times more than Europeans, and pay three times less! Yet, more Europeans have a cell phone than Americans.
The European and American cell phone markets present two key differences. In Europe, GSM (2nd generation) and UMTS (3rd generation) are the two sole standards, while in the United-States, competition between standards is a de facto, especially between GSM and CDMA. The second key
difference lies in tariffs. In the UnitedStates, the «Receiving Party Pays» applies; the called party pays the call termination received on his/her cell phone. In Europe, the caller pays for the call ( «Calling Party Pays»).
Figure 1 : Mobile penetration rate in the population and prepaid share in the overall client base in 2006 100%
160%
Penetration rate
80%
118%
120%
109%
106%
67% 100%
104%
103%
59%
60%
82%
78%
51%
80% 45%
40%
60%
35%
40% 20% 15%
20%
Prepaid (%) in subscriber base
140%
138% 87%
6% 0%
0% Italy
United Kingdom
Penetration rate
EU 15
Finland
Spain
Germany
France
USA
Percentage of prepaid in subscriber base
Page 1
www.quantifica.fr
Vision – The Quantifica Newsletter
March 2008 N° 7
In the United-States, cell phone penetration appears below European levels. In the United-States, SIM card penetration at end-2006 in the overall population totaled 78%, much lower than the average European penetration rate of 109%; Italy even announces a 138%penetration rate. Moreover, the US market posted a 9% cell phone take-up between 2005 and 2006 versus 8% over the same period in Europe. The prepaid market accounts for close to 87% of active SIM cards in Italy. Given this context, the number of people who concomitantly own at least 2 active SIM cards is very high and contributes to « boost » the penetration rate. The proportion of prepaid cards in the subscriber base is much lower in the United States, where it does not represent more than 15% of the base, versus Europe’s average 59%. American market dynamics have favored (postpaid) calling plans, appealing to consumers with deep pockets and heavy phone use. In Europe, France shares
characteristics of the US markets: a low penetration rate, with a small number of prepaid plans. Across Europe, the dual SIM card holder reflects cell phone marketing pushing prepaid plans. In short, America’s cell phone penetration mirrors Europe’s. Penetration rates can, therefore, be defined as individuals having access to and regularly using a cell phone within the overall population. Amazing! Americans call four times more than Europeansi ! An American cell phone subscriber averages 833 minutes (outbound and inbound), whereas in Europe, average consumption across the same perimeter totaled a mere 176 minutes, with Finnish consumption totaling an average 315 mn/habitant/month1. Voice consumption for Europe was calculated using the American method which includes calls received.
i
Figure 2 : Average consumption per inhabitant vs price per minute2 in 2006 Germany
0,25
United Kingdom
Price per minute ($)
0,20 Italy
EU 15 0,15
Spain France Finland
0,10
USA
0,05 R2 = 0,96 0,00 0
100
200
300
400
500
600
700
Average consumption per inhabitant (Min/month)
Page 2
www..quantifica.fr
Vision – The Quantifica Newsletter
March 2008 N° 7
In 2006, European users averaged 45 SMS/per SIM card/per month with major differences between the countries. In 2006, Denmark posted an average 158 SMS/subscriber/month versus 27 SMS for France. In the United States, interconnection between operators for SMS messages has been effective since April 2002. The
number of SMS messages exchanged between subscribers has grown quite rapidly, from 0.25 in 2001 to nearly 39 SMS in 2006. Price per minute was calculated by divding Voice ARPU by average consumption per subscriber which is expressed in minutes. iv
Figure 3 :2006 EBITDA margin and revenue growth 2005- 2006 50%
20% 18% 38% 33%
EBITDA margin
16% 16%
37% 33%
33%
32% 29%
30%
27%
12%
11% 20%
9%
8,63%
8%
5,01% 10%
4% -0,23%
0% Vodafone UE 15
Orange UE 15
0,04% Telefonica UE 15
Tmobile UE 15
Revenue growth
40%
0% AT&T US
Verizon US
Sprint US
Tmobile US
-10%
-4% EBITDA margin
Revenue growth
Vodafone EU 15: Germany, Spain, France, Greece, Ireland, Italy, Netherlands, Portugal, United Kingdom Orange EU 15: Belgium, Spain, France, Netherlands, United Kingdom Telefonica EU 15: Germany, Spain, Ireland, Italy, United Kingdom T Mobile EU 15: Germany, Austria, Netherlands, United Kingdom
The price of a cell phone minute in the USAiv is much lower than in Europe, or 5 ct$/mn versus 17. Compared to France, where prices are deemed competitive, price per minute is three times less, and five times less than Germany where prices are relatively high. The American market counts some 180 telecoms operators and more than 60 MVNOs. But, with mergers between AT&T, Cingular and BellSouth in 2004, followed by Sprint with Nextel in 2005, the American market has furthered consolidation around four operators. Today, these four operators control 85% of the market. While two operators use the GSM standard (AT&T/Cingular and T-
Mobile USA), the other two operators apply the CDMA standard (Verizon and Sprint/Nextel). The four key American operators, akin to Europe’s top four cell phone companies, post EBITDA margins averaging 33%. In 2006, the American cell phone companies grossed higher revenues on their domestic market than their European counterparts. This difference can be attributed to external growth operations which the European operators have carried outside of Europe. In 2007, Verizon acquired 3 regional operators. Sprint, recently purchased a local cell phone company local, and AT&T‘s acquisition of Dobson is awaiting approval by the FCC. Moreover, fixed– cell phone-Internet convergence is Page 3
www..quantifica.fr
Vision – The Quantifica Newsletter
March 2008 N° 7
speeding up mergers amongst operators, and contributing to the overall consolidation of the American telecommunications market.
iv Price per minute was calculated by divding Voice ARPU by average consumption per subscriber which is expressed in minutes.
100%
5000 83%
80%
3755
82% 3666
79% 3768
73% 3098
60%
4000
72% 2992 52%
40%
52%
2284
1835
20%
3000 HHI
Cumulated market share of the leading two operators
Figure 4: Cumulated market shares of the leading two operators HHI index1
2000
1000
0%
0 France
Finland
Spain
Italy
Germany
Cumulated market share of the leading two operators
The current cell phone consolidation taking place in America is, however, limited compared to the number of national markets across Europe (see Figure 4). First, the United States is nearing the United Kingdom in terms of cumulated market shares held by the leading two cell phone operators. Indeed, both countries post 52%, while in both France and Finland the two leading operators have a combined share of 80% of the market. Further, in the United States the HHI1 concentration index is less than in Europe. Generally speaking, the American cell phone market is more competitive than most European countries. American
United Kingdom
USA
HHI
competition level stems from its license granting process, which created a high number of small cell companies, operating either on a local or regional basis. More, the 60 MVNOs have reinforced the diversity of the offer. In 2006, MVNOs counted more than 16 million subscribers, representing close to 7% of the subscriber base. Two MVNOs dominate: TracFone, a subsidiary of America Movil, targeting the Hispanic community and Virgin Mobile, a jointventure between Virgin Group and Sprint Nextel targeting the youth market, and mirroring Virgin’s target in Europe--which has been successful.
QUANTIFICA www.quantifica.fr QUANTIFICA (formerly, OMSYC, World Observatory of Communication Systems) is an independent
research and analysis center since 1988. With our Data-on-Demand database you can create your own tools, by personalising data from a selection of more than 234 000 available items from the world of electronic service communications and media markets. Our clients include regulatory authorities, operators as well as investment banks and auditing firms. CONTACT: Sara CLIGNET
www.quantifica.fr +(33) (0)1.55.04.87.30 / [email protected] 4 QUANTIFICA – 32, rue des Jeûneurs – 75002 – PARIS - FRANCE
Vision
The Quantifica Newsletter
OMSYC is now QUANTIFICA. On January 1st 2008, OMSYC (World Observatory Of Communication Systems) became Quantifica.
Comparing the European Union 15 and American cell phone markets Asmaa Zaher, Analyst. Data used to write this article come from the Quantifica database at www.quantifica.fr.
Americans use their cell phones four times more than Europeans, and pay three times less! Yet, more Europeans have a cell phone than Americans.
The European and American cell phone markets present two key differences. In Europe, GSM (2nd generation) and UMTS (3rd generation) are the two sole standards, while in the United-States, competition between standards is a de facto, especially between GSM and CDMA. The second key
difference lies in tariffs. In the UnitedStates, the «Receiving Party Pays» applies; the called party pays the call termination received on his/her cell phone. In Europe, the caller pays for the call ( «Calling Party Pays»).
Figure 1 : Mobile penetration rate in the population and prepaid share in the overall client base in 2006 100%
160%
Penetration rate
80%
118%
120%
109%
106%
67% 100%
104%
103%
59%
60%
82%
78%
51%
80% 45%
40%
60%
35%
40% 20% 15%
20%
Prepaid (%) in subscriber base
140%
138% 87%
6% 0%
0% Italy
United Kingdom
Penetration rate
EU 15
Finland
Spain
Germany
France
USA
Percentage of prepaid in subscriber base
Page 1
www.quantifica.fr
Vision – The Quantifica Newsletter
March 2008 N° 7
In the United-States, cell phone penetration appears below European levels. In the United-States, SIM card penetration at end-2006 in the overall population totaled 78%, much lower than the average European penetration rate of 109%; Italy even announces a 138%penetration rate. Moreover, the US market posted a 9% cell phone take-up between 2005 and 2006 versus 8% over the same period in Europe. The prepaid market accounts for close to 87% of active SIM cards in Italy. Given this context, the number of people who concomitantly own at least 2 active SIM cards is very high and contributes to « boost » the penetration rate. The proportion of prepaid cards in the subscriber base is much lower in the United States, where it does not represent more than 15% of the base, versus Europe’s average 59%. American market dynamics have favored (postpaid) calling plans, appealing to consumers with deep pockets and heavy phone use. In Europe, France shares
characteristics of the US markets: a low penetration rate, with a small number of prepaid plans. Across Europe, the dual SIM card holder reflects cell phone marketing pushing prepaid plans. In short, America’s cell phone penetration mirrors Europe’s. Penetration rates can, therefore, be defined as individuals having access to and regularly using a cell phone within the overall population. Amazing! Americans call four times more than Europeansi ! An American cell phone subscriber averages 833 minutes (outbound and inbound), whereas in Europe, average consumption across the same perimeter totaled a mere 176 minutes, with Finnish consumption totaling an average 315 mn/habitant/month1. Voice consumption for Europe was calculated using the American method which includes calls received.
i
Figure 2 : Average consumption per inhabitant vs price per minute2 in 2006 Germany
0,25
United Kingdom
Price per minute ($)
0,20 Italy
EU 15 0,15
Spain France Finland
0,10
USA
0,05 R2 = 0,96 0,00 0
100
200
300
400
500
600
700
Average consumption per inhabitant (Min/month)
Page 2
www..quantifica.fr
Vision – The Quantifica Newsletter
March 2008 N° 7
In 2006, European users averaged 45 SMS/per SIM card/per month with major differences between the countries. In 2006, Denmark posted an average 158 SMS/subscriber/month versus 27 SMS for France. In the United States, interconnection between operators for SMS messages has been effective since April 2002. The
number of SMS messages exchanged between subscribers has grown quite rapidly, from 0.25 in 2001 to nearly 39 SMS in 2006. Price per minute was calculated by divding Voice ARPU by average consumption per subscriber which is expressed in minutes. iv
Figure 3 :2006 EBITDA margin and revenue growth 2005- 2006 50%
20% 18% 38% 33%
EBITDA margin
16% 16%
37% 33%
33%
32% 29%
30%
27%
12%
11% 20%
9%
8,63%
8%
5,01% 10%
4% -0,23%
0% Vodafone UE 15
Orange UE 15
0,04% Telefonica UE 15
Tmobile UE 15
Revenue growth
40%
0% AT&T US
Verizon US
Sprint US
Tmobile US
-10%
-4% EBITDA margin
Revenue growth
Vodafone EU 15: Germany, Spain, France, Greece, Ireland, Italy, Netherlands, Portugal, United Kingdom Orange EU 15: Belgium, Spain, France, Netherlands, United Kingdom Telefonica EU 15: Germany, Spain, Ireland, Italy, United Kingdom T Mobile EU 15: Germany, Austria, Netherlands, United Kingdom
The price of a cell phone minute in the USAiv is much lower than in Europe, or 5 ct$/mn versus 17. Compared to France, where prices are deemed competitive, price per minute is three times less, and five times less than Germany where prices are relatively high. The American market counts some 180 telecoms operators and more than 60 MVNOs. But, with mergers between AT&T, Cingular and BellSouth in 2004, followed by Sprint with Nextel in 2005, the American market has furthered consolidation around four operators. Today, these four operators control 85% of the market. While two operators use the GSM standard (AT&T/Cingular and T-
Mobile USA), the other two operators apply the CDMA standard (Verizon and Sprint/Nextel). The four key American operators, akin to Europe’s top four cell phone companies, post EBITDA margins averaging 33%. In 2006, the American cell phone companies grossed higher revenues on their domestic market than their European counterparts. This difference can be attributed to external growth operations which the European operators have carried outside of Europe. In 2007, Verizon acquired 3 regional operators. Sprint, recently purchased a local cell phone company local, and AT&T‘s acquisition of Dobson is awaiting approval by the FCC. Moreover, fixed– cell phone-Internet convergence is Page 3
www..quantifica.fr
Vision – The Quantifica Newsletter
March 2008 N° 7
speeding up mergers amongst operators, and contributing to the overall consolidation of the American telecommunications market.
iv Price per minute was calculated by divding Voice ARPU by average consumption per subscriber which is expressed in minutes.
100%
5000 83%
80%
3755
82% 3666
79% 3768
73% 3098
60%
4000
72% 2992 52%
40%
52%
2284
1835
20%
3000 HHI
Cumulated market share of the leading two operators
Figure 4: Cumulated market shares of the leading two operators HHI index1
2000
1000
0%
0 France
Finland
Spain
Italy
Germany
Cumulated market share of the leading two operators
The current cell phone consolidation taking place in America is, however, limited compared to the number of national markets across Europe (see Figure 4). First, the United States is nearing the United Kingdom in terms of cumulated market shares held by the leading two cell phone operators. Indeed, both countries post 52%, while in both France and Finland the two leading operators have a combined share of 80% of the market. Further, in the United States the HHI1 concentration index is less than in Europe. Generally speaking, the American cell phone market is more competitive than most European countries. American
United Kingdom
USA
HHI
competition level stems from its license granting process, which created a high number of small cell companies, operating either on a local or regional basis. More, the 60 MVNOs have reinforced the diversity of the offer. In 2006, MVNOs counted more than 16 million subscribers, representing close to 7% of the subscriber base. Two MVNOs dominate: TracFone, a subsidiary of America Movil, targeting the Hispanic community and Virgin Mobile, a jointventure between Virgin Group and Sprint Nextel targeting the youth market, and mirroring Virgin’s target in Europe--which has been successful.
QUANTIFICA www.quantifica.fr QUANTIFICA (formerly, OMSYC, World Observatory of Communication Systems) is an independent
research and analysis center since 1988. With our Data-on-Demand database you can create your own tools, by personalising data from a selection of more than 234 000 available items from the world of electronic service communications and media markets. Our clients include regulatory authorities, operators as well as investment banks and auditing firms. CONTACT: Sara CLIGNET
www.quantifica.fr +(33) (0)1.55.04.87.30 / [email protected] 4 QUANTIFICA – 32, rue des Jeûneurs – 75002 – PARIS - FRANCE
Related Documents
Cell Phone Markets: Comparing Us & Europe
October 2019 10
Broadband Market: Comparing Us & Europe
October 2019 8
Cell Phone
October 2019 48
Cell Phone
November 2019 34
Cell Phone
June 2020 25