The reporting of Telefónica, PT and Orange show that quad-play is a hit in Spain, Portugal and France. Vodafone used 14,9 billion EUR to acquire cablecos in Germany and Spain – to enable quad.
Operators need to be realistic about the positives quad-play can bring and use facts to spot best practice. tefficient’s framework provides a great start if entering quad – or facing competition that do.
We look at what happened to the MVNO businesses when Orange, SFR and Bouygues launched their sub-brands Sosh, Red and B&YOU during second half of 2011 in preparation for the announced launch of Free mobile.
MVNOs were once the challengers typically differentiating through targeted segmentation or price – or both. With the emergence of MNO sub-brands one could fear for what happens to MVNOs in a market.
Download analysis: tefficient public industry analysis 3 2014 Impact of sub-brands on MVNOs
At tefficient, we’ve built a comprehensive before/after analysis framework of the results operators have achieved when transforming their offers from single-service to quad-play.
There are many indications that quad-play is about to become the new European standard: Telekom will go quad-play in Germany during 2014; Vodafone has acquired Kabel Deutschland and Ono to go beyond mobile-only; TeliaSonera reorganised 1 April to converge fixed and mobile on a national basis.
Quad is propagating over Europe with south-westerly winds. The map above shows the wind direction: From Portugal, Spain and France towards Central and North Europe.
The first step towards true quad is often what we call light quad – a discount that a customer gets if he or she adds mobile to triple-play. In this case, it’s typically not very prominent in operator’s marketing, there’s typically no product brand name, and far from the straight-forward pitch of true quad operators.
The current position of European operators – who have quad capability – is seen in our quad pyramid above. The arrows indicate operators that are seen to take action to move upwards.
Through our before/after analysis, we’ve spotted several very interesting outcomes – best as well as worst practices. These can be used to either prepare your own journey into quad – or understand how to best defend against quad-capable competitors.
Analysis & Go-to-market, 2014
Preparing analysis and facilitating workshops on 4G LTE and fibre adoptionwith over 40 of Comptel’s operator customers from around the world as part of Comptel’s Focus Group in Helsinki 25-26 March 2014.
This is our fourth analysis on subscriber acquisition cost (SAC) and subscriber retention cost (SRC). Previous SAC & SRC analyses showed that an increase in SRC had a positive effect on contract churn without any negative effect on EBITDA – as long as not exceeding 100% of contract SAC.
Our new analysis shows that much has happened in 2013: Average unit SAC and SRC have decreased significantly. How come – and what has it led to?
Based on data from 35 mobile operators in 24 mature markets globally.
The analysis comes in two versions: A public version which you can download below – and a premium version which adds country-specific SAC & SRC analyses on eight countries: France, Germany, Poland, Austria, the Netherlands, UK, Denmark and Canada.
Download public version: tefficient industry analysis 2 2014 SAC vs SRC – public version
Analysis & Consulting, 2014
Presented to the members of the Ambassadors of Telecom organisation in the Netherlands 13 March 2014. The title was “Benchmarking – and the tale of a wing clipped Dutch opportunity”. In addition to tefficient’s approach to benchmarking, we discussed if there is a mobile data dilemma in the Netherlands (comparing to the rest of the world).
The presented slides can be viewed here.
Analysis & Consulting, 2014
How have mobile operators introduced single- and multi-user shared plans in USA, Sweden, Finland, Norway, Denmark, Canada and the UK? Which business results have operators achieved and how has competition reacted? Which modifications have been necessary and when? Can the same customer loyalty effects be achieved without the heavy implementation of multi-user shared plans? Which defensive actions have proven to be most successful?
Based on these international facts and best practice, what would tefficient recommend? Taking local conditions, operator strategy and market position into account.
Commissioned twice by two different operators.
A1, the Austrian incumbent, today reports a year-on-year EBITDA decrease of 19.4% for 2013. In this situation, you have to highlight the positives. Telekom Austria group is e.g. saying: “A1 Premium Monthly Churn Rate at Historic Low“.
By now, our industry should have learned that churn figures never can be referred to without also referring to the subscriber retention cost (SRC). It’s simple to decrease postpaid churn – if you have deep pockets: Pay higher SRC to get more customers to stay.
So since Telekom Austria hasn’t done it – let us plot postpaid churn against SRC. It’s the graph below.
In 2013, A1 has been able to reduce postpaid churn to below 10% on annual basis which – internationally compared – is very low. But starting Q4 2012, A1’s SRC elevated from around 140 EUR to about 170 EUR. This happened at the same time as smartphone price points started to come down which, in other markets, was positive for SRC. The reason to A1’s increase must therefore be found in the local market: In January 2013, ‘3’ incorporated Orange to become a strong number 3 in Austria.
But how good is A1’s churn rate? If we plot the figures of T-Mobile and ‘3’ into the graph just above, we can see that competitors report as low churn as A1. (Prior to adding Orange, ‘3’ was even at annual churn levels below 3%). T-Mobile has followed A1’s SRC upwards, but from a lower level. In a local perspective, A1’s achievements seem in line or even substandard.
Note. T-Mobile and ‘3’ have not yet reported Q4/2H 2013. ‘3’ doesn’t report SRC.
Of global smartphone shipments Q3 2013, the four major operating systems stood for 99.4% – entirely dominated by Android. Why on earth should telecom operators then care to support the remaining 0.6%? Like Firefox, Tizen, Ubuntu and Sailfish?
Yet some operator groups, often with exposure to maturing markets, are actually doing a whole lot to breed viable alternatives to Android, iOS and Windows Phone. Why?
It’s not just about cost. In the established ecosystems, operators see the risk of being squeezed out. Partnering with providers of alternative smartphone OSs can re-establish operators in the ecosystem and give back control over the end-user experience.
Download analysis: tefficient public industry analysis 1 2014 alternative smartphone OSs
2013 ended with over 1 billion smartphones sold – a new record. But mature market operators should look at Korea as a projection of what will come: It is the world’s most advanced LTE market based on penetration and usage levels.
The operators in Korea – SK Telecom, KT and LG Uplus – are continuing to sell a lot of LTE equipment to its customers, even though sales slowed somewhat during 2013. But whereas the sales of LTE equipment earlier led to a lift in overall smartphone penetration, it looks as if it’s not going to drive smartphone penetration very much longer: See how the three top curves in the graph slow down even though the LTE curves go up.
Note: LG Uplus hasn’t yet stated overall smartphone penetration for Q4 2013. Non-LTE smartphones are soon phased out of LG Uplus.
In the world’s most advanced LTE market, LTE seems to run out of fuel. Existing smartphone customers do upgrade to LTE smartphones, but the overall smartphone penetration in Korea doesn’t climb above 70% [SK Telecom holds 50% of market, KT 30% and Uplus 20%]. If we extrapolate, the LTE penetration will equal the smartphone penetration during 2014 – more or less.
For mature market operators believing in LTE’s ability to take smartphone penetration levels beyond the 70% level observed today in countries like e.g. Sweden, Norway, the Netherlands, Australia, the UK and France this is bad news. The Korean development indicates that LTE as such is not enough.
The situation resembles 2007 – before the arrival of the iPhone. Incremental improvements had made products from e.g. Nokia the best ever, but disruption was needed to create new growth. iPhone was the catalyst in 2007. The mobile world – including Apple – are back into incremental improvements and the current products are the best ever. From where will the innovation come that creates new growth in mature markets?
