Archive for October, 2005

AUSTRALIAN FACTS AND FIGURES

Tuesday, October 18th, 2005

Continuing strong growth
Despite some reports that might indicate otherwise, the Australian telecoms industry is in good shape – I would say perhaps in its best form since 2000.

Revenues are increasing by 5.5% in 2005, and a conservative forecast for 2006 is 4.1%. Over the last five years the average growth has been 4.6%, well above most of our western trading partners.

Revenues services market by operator
Year ends June
Telstra
Optus
Fixed SPs*
Mobile SPs*
Data SPs*
Total

$ millions

2004
19,280
6,675
690
2,715
910
30,270

2005(e)
20,090
6,930
800
3,140
960
31,920

2006(e)
20,530
7,230
910
3,560
1,030
33,260

(Source: BuddeComm – Telecoms Industry – Overview and Statistics Report 2005/2006)
* at wholesale value

Telstra the best international performer
Telstra’s profits are world famous. No other similar incumbent telco in the western world even comes close to Telstra’s consistent financial performance.

On competition, we see that competitors now have 45% of the retail market and a 35% share in wholesale values. This is certainly not a bad achievement. We have seen a number of new players coming to the fore, and the situation is now back to what it was in 1999, when we had nine major telcos with revenues of over $100 million per annum. Some of the names have changed, however – they now include Vodafone, AAPT, Hutchison, Commander, SP Telemedia, Macquarie Telecom, PowerTel, iiNet and People Telecom.

Total revenues 2nd tier market
Year
Retail value
Wholesale value

$ million

2004
7,781
4,315

2005(e)
8,505
4,900

2006(e)
9,190
5,500

(Source: BuddeComm Telecoms Industry – Overview and Statistics Report 2005/2006)
Note: Excluding Telstra and Optus

So what are these negative reports all about?

Profit margins set to half
Telstra’s part of the problem relates to the fact that the company will finally have to join the rest of the industry and become used to much lower profit margins.

This could, over time, be as dramatic as a reduction of 50%. The competitors are used to low margins, but they also will experience further pain.

The margins on voice services are going down across the fixed and mobile markets. VoIP (fixed and wireless) will have an even greater impact here during 2007/2008. And the move from dial-up Internet to broadband constitutes a further margin squeeze. While I, of course, welcome the low entry-level prices for broadband, I am not sure if the industry has been managing these margins well. But what’s done is done.

The other reality is that the current telecommunications market is very much a commodity industry. In other words, you need a very large operation to make a profit. Back in 1999 I forecast that this would mean there wouldn’t be room for more than six national competitors, and they would need revenues of $1 billion plus.

And even such a large revenue figure is no guarantee of success. AAPT is still struggling; I remain pessimistic about Hutchison’s ability to deliver a decent ROI; and Vodafone is still only marginally successful. Optus’s margins are also squeezed and, given the current situation, I don’t see them going back to their heydays of double-digit growth.

Value-added services
On the other side we see the success and resilience of many ISPs, most of whom have built interesting value-added services around their businesses, ranging from PC services, web hosting, firewalls, security to home networking and so on. In general terms, most of the telcos have failed to move into value-added areas and the margin squeezes are going to cause further problems in this market.

It is too easy to blame this simply on poor wholesale rates from Telstra.

If we follow the developments of the industry over the last decade then we see that, despite Telstra’s dominance in the market, other telcos and ISPs have made good inroads – customers obviously value the extra services they receive from these competitors.

Infrastructure competition
There are now also more than 50 infrastructure-based projects, either in existence or under construction. These include Fibre-to-the-Home (FttH), Broadband over Powerlines (BPL), and wireless. In the infrastructure business the first few years are always the most difficult, as it is necessary to build before customers can come, but this has now been done by companies such as Unwired, PBA, SP Telemedia, utilities and regional companies such as BushCom, CountryTel and a dozen or so others.

On top of this, there are a dozen WiFi operators who can extend their business into WiMAX, plus an equal number of DSLAM operators who are also able to deliver new innovative services independently of Telstra.

With another $5 billion earmarked for infrastructure investments the future looks bright for telecoms in Australia, as long as we are able to use this money wisely and not fritter it away in political pork-barrelling.

On 24 August, BuddeComm will launch the 2005/2006 edition of its annual reports on the Australian Telecommunications Industry. In all, a set of 12 reports analyses the Australian telecommunications market in great detail.

The launch will take place at two Roundtables – one in Sydney (24 August) and one in Melbourne (25 August).

2005 Australian Publications

Due For Release in August 2005
PDF(SUL)*

Telecoms Industry – Overview and Statistics
$995

Market & Industry Analyses – Moving into 2006
$795

Residential, Business, Government and Regional Markets
$795

Telco Company Profiles – Telstra and Optus
$495

Telco Company Profiles – 2nd Tier Companies
$495

NGN, VoIP, IP and Internet
$795

Broadband Powerlines and Utilities Markets
$795

Mobile Communications – from 2G to 3G
$795

Mobile Data and Content Markets
$795

Broadband Market – DL and cable modems
$795

Wireless Broadband market – the arrival of WiMAX
$795

Released in May 2005

Triple Play: IP, Broadband and Digital TV
$795

Broadcasting and Pay TV Market
$795

*Prices: Single-User PDF Licence excluding GST for Australian customers).
PS
I have put all the synopses of these reports into one pdf file (13 pages), which has become an interesting research document in itself – free for you to download here

‘State of the Industry’ Roundtables with Paul Budde
Sydney – Wednesday 24 August 2005
Melbourne – Thursday 25 August 2005
Theme: Australian Telco Market moving into 2006
Presentations and discussions will mainly concentrate on the latest results contained in our new Australian reports, bringing you up to date regarding the latest research data and, perhaps more importantly, analysing the market with you – highlighting the areas where opportunities exist.

I will bring you up to date regarding the latest research data and, perhaps more importantly, analyse the market with you – highlighting the areas where opportunities exist.

Cost:
$350 per person (excluding GST) – this includes morning/afternoon coffee and lunch
Venues:
24 August: Observatory Hotel, 89-113 Kent Street, Sydney
25 August: The Windsor Hotel, 103 Spring Street, Melbourne.
Booking: Call or e-mail Christine Lewis to make your booking.
Telephone: 02 4998 8144 E-mail: pbc@budde.com.au
Online: Sydney and Melbourne

We invite your comments: Comments Off on AUSTRALIAN FACTS AND FIGURES

TELCO MARKET MOVING INTO 2006

Tuesday, October 4th, 2005

On the 24th of August BuddeComm will publish its annual set of reports on the ‘State of the Australian Telecommunications Industry’. In all a set of 12 reports analyse the Australian telecommunications market in great detail.

The launch will take place at two Roundtables one in Sydney (24 August) and one in Melbourne (25th August.

Key highlights:
The market will grow by 5.5% – from $30.270 million in 2004 to $31.920 in 2005 – with a further 4.1% growth expected to deliver $33.260 million in revenues in 2006.
The Australian market is still standing up in the international arena. Revenue growth remains well above GDP. In 2005 growth is still driven by mobile (11.3%) – from 2006 onwards data/broadband will be the driver.
We forecast mobile growth in 2006 to be 6.5%, while broadband will deliver an 8.5% revenue growth.
Telstra’s growth is only slightly below the growth of the overall growth of the market – 4.2% vs 5.5% – demonstrates its continued market dominance. There has normally been a gap by at least two percentage points in favour of its competitors.
Telstra has strengthened its competitive position during 2004/2005 at the cost of Optus, most 2nd tier telcos and the smaller ISPs.
Telstra’s overall market share has been slipping by an average of 2% per annum over the last five years. We expect this to slow to around only 0.1% for the coming year – mainly because Optus’s growth is slowing down and because of the very low margins that apply to broadband, which allows Telstra to keep the lion’s share of these revenues.
As we have been predicting for several years, after a decade of gaining market share Optus’s high levels of growth are coming down and we expect them to settle at around the 22% market share. I don’t expect this to change
After two years of double-digit growth, Optus’ revenue growth, also, is very close to that of Telstra – around the 4% mark. For the first time its growth is below the industry average.
The combined local access and voice market is able to hold its ground. Telstra has been able to compensate for the fall in voice revenues by doubling its access revenues. However, any further increases will see customers moving into mobile more quickly.
However, we do believe that Telstra will be able to compensate for the next round of price cuts, brought upon it by VoIP, through new triple play models. Flexible access packages will allow it to start charging premium prices.

Table 1 – Revenues services market by operator – 2000 – 2005
Year ends June
Telstra
Optus
Fixed SPs*
Mobile SPs*
Data SPs*
Total

$ millions

2000
18,600
4,160
690
1,470
490
25,410

2001
18,270
4,670
820
1,930
650
26,340

2002
18,200
4,850
810
2,000
770
26,630

2003
18,650
5,610
650
2,085
870
27,865

2004
19,280
6,675
690
2,715
910
30,270

2005(e)
20,090
6,930
800
3,140
960
31,920

2006(e)
20,530
7,230
910
3,560
1,030
33,260

(Source: Paul Budde Communication Pty Ltd 2005)
* at wholesale value

Telecoms, Mobile and Broadband in Australia 2005/2006 reports:
Telecoms Industry – Overview and Statistics
$995

Market and Industry Analyses – moving into 2006
$795

Residential, Business, Government and Regional Markets
$795

Telco Company Profiles – Telstra and Optus
$495

Telco Company Profiles – 2nd-tier players
$495

NGN, VoIP, IP and Internet
$795

Broadband Powerline and utilities markets
$795

Mobile Communications – from 2G to 3G
$795

Mobile Data and Content Markets
$795

Broadband Market – DSL and cable modems
$795

Wireless Broadband market – the arrival of WiMAX
$795

Triple Play: IP, Broadband and digital TV
$795

*Prices: Single-User PDF Licence excluding GST for Australian customers).

More information on these reports will be available at the launch.

‘State of the Industry’ Roundtables with Paul Budde
Sydney – Wednesday 24 August 2005
Melbourne – Thursday 25 August 2005
Theme: Australian Telco Market moving into 2006
Presentations and discussions will mainly concentrate on the latest results of our new Australian reports that we will publish at the same time, covering:
Telecoms Industry – Overview and Statistics
Market & Industry Analyses – moving into 2006
Residential, Business, Government and Regional Markets
Telco Company Profiles:
Telstra and Optus
2nd Tier Companies
NGN, VoIP, IP and Internet
Broadband Powerline and utilities markets
Mobile Communications, Data and Content Markets
Broadband Market – DSL and cable modems
Wireless Broadband market- moving towards WiMax mobility
Triple Play: IP, Broadband and Digital TV
Broadcasting and Pay TV Market

I will bring you up to date regarding the latest research data and, perhaps more importantly, analyse the market with you – highlighting the areas where opportunities exist.

Cost:
$350 per person (excluding GST) – this includes morning/afternoon coffee and lunch
Venues: 24 August: Observatory Hotel, 89-113 Kent Street, Sydney, 25 August: The Windsor Hotel, 103 Spring Street, Melbourne. If we can attract 15 people or more in other cities I am prepared to also conduct seminars in those cities.
Booking: Call or e-mail Christine Lewis to make your booking.
Telephone: 02 4998 8144 E-mail: pbc@budde.com.au
Online: Sydney and Melbourne

We invite your comments: Comments Off on TELCO MARKET MOVING INTO 2006

ALBTELECOM’S PRIVATISATION CANCELLED – OCTOBER 2005

Saturday, October 1st, 2005

Privatisation of Albania’s incumbent, Albtelecom, has been cancelled by the government on the grounds that the privatisation was not in the best interests of the country. The country’s latest attempt at privatisation commenced in July 2004 when the state announced plans to sell a 76% stake. The number of interested parties was initially 12 and included Telekom Slovenije; Turk Telekom and partner Calik Enerji; a venture between South Korea’s Samsung and SK Telecom; a consortium comprised of Kuwaiti mobile operator MTC and Ma Kharafi and US-based Western Wireless. A shortlist of six consortia was drawn up in January 2005 and included the Communicorp Group, Western Wireless, the venture between Samsung and SK Telecom, Turk Telekom and partner Calik Enerji, Telekom Slovenia and the MTC Kuwait-Ma Kharafi consortium. Only one bid was submitted in early May 2005 from the Turk Telekom and Calik Enerji consortium. The bid, for €120 million, was accepted by the government.

The Albanian government has been planning the privatisation of Albtelecom for more than seven years, but was postponed numerous times for various reasons including war in neighbouring Kosovo and on the advice of the International Monetary Fund due to the crash of the global telecoms market.

In an effort to make Albtelecom more attractive for the privatisation, a GSM licence was awarded to the incumbent, which created a wholly-owned mobile subsidiary, Eagle Mobile.

See also:
Albania – Telecoms Market Overview & Statistics;
South Korea telecommunications market overview;
Kuwait – Telecoms Market Overview & Statistics;
Turkey – Key Statistics, Telecommunications Market Overview and Internet.

We invite your comments: Comments Off on ALBTELECOM’S PRIVATISATION CANCELLED – OCTOBER 2005

ACQUISITION OF PALMSOURCE BY ACCESS IN LATE 2005 – OCTOBER 2005

Saturday, October 1st, 2005

Access, a Tokyo-based developer of embedded Web browsers for mobile devices, announced its acquisition of PalmSource, the company behind the Palm OS. Access is best known for its NetFront Web browser, which the company estimates that its browser is in use in over 180 million devices around the globe. Access sees the acquisition as something that will strengthen its position in the mobile content delivery business, as well as wireless Internet access software for mobile devices.

PalmSource was originally the software division of PDA-maker Palm, and was spun off from Palm in October 2003. PalmSource has a licensing contract with Palm, which until July 2005 was known as PalmOne, that runs to December 2009.

See also:
Japan;
Japan – Mobile Market – 3G & Mobile Data.

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ARGENTINA’S MOBILE REVOLUTION – OCTOBER 2005

Saturday, October 1st, 2005

After the economic slump of 2000-2002, Argentina’s mobile telephony is again booming. Mobile subscribers soared 76% in 2004, reaching 16.5 million by mid-2005.

Argentine mobile phone providers face intense competition to expand their networks and capture new users. In fact, the mobile landscape is undergoing major transformations in 2005.

In January 2005, the number of competing companies decreased from four to three, following Telefónica’s acquisition of Movicom BellSouth. The merged company gained uncontested market leadership, with around 42% market share, and was re-launched under the Movistar brand in April 2005.

By mid-2005, the erstwhile market leader, Telecom Personal (Telecom Argentina), had fallen into third place, while CTI Móvil (America Móvil) had moved into the number two position.

With the merging of BellSouth’s and Telefónica’s Argentine mobile operations, Movistar ended up accumulating over 90MHz of radio spectrum. As a condition of the merger, the government required Movistar to relinquish 42.5MHz of spectrum within two years of the merger.

Movistar began the process of returning part of its frequency spectrum in October 2005, starting with excess held the northern and southern cities. It said it further planned to relinquish frequency for some of the country’s metropolitan areas in the medium term.

The government intends to allocate the returned spectrum to a new entrant. The clear favourite is cooperative start-up venture Comarcoop, which is waiting for a frequency allocation in order to launch services.

In July 2005, CTI Móvil asked the regulator for an allocation of 10MHz in the 850MHz band to improve its service quality. Comarcoop said it was willing to share the 42.5MHz of spectrum with CTI Móvil, since it plans to use only what it needs to launch services.

See also:
Argentina – Mobile Communications and Mobile Data Market;
America Movil.

We invite your comments: Comments Off on ARGENTINA’S MOBILE REVOLUTION – OCTOBER 2005