FIXED MOBILE CONVERGENCE: DRIVERS AND POTENTIAL IMPACT ON MARKETS IN MENA

Transcription

1 ETISALAT TELECOMS SUMMIT 2016 BUILDING BLOCKS FOR SUCCESSFUL OPERATOR STRATEGIES FIXED MOBILE CONVERGENCE: DRIVERS AND POTENTIAL IMPACT ON MARKETS IN MENA NOVEMBER 2016 KEREM ARSAL

2 FMC take-up has varied in European countries, due to different market conditions and operator incentives Percentage of fixed broadband households with fixed mobile convergence (FMC) bundles, selected European countries, % 2

3 Many factors act together as incentives and drivers for FMC take-up Integrated operator prevalence; consolidation Household size and budget decision-makers Household structure Market structure Strong declines in ARPU Mobile competition Fixed broadband churn Exposed fixed-only players; MVNOconducive wholesale regimes 0 Mobile market share growth Strong fixed broadband and weak mobile; multi-sim RoI acceleration; cross-selling by mobile discounts FTTx strategy Pricing and affordability Recognisable discounts or benefits; acceptable margins 3

4 Market structure FMC is not always triggered by integrated incumbents but symmetrical market leadership is key Leaders in both fixed and mobile can expose standalone competitors Leading FMC operator Mobile market share at launch Fixed market share at launch Challenge mobile operators with limited fixed broadband assets Improve retention (fixed and mobile) Consolidate mobile SIMs in households Steal market share from mobile-only Fixed challengers without mobile have little to lose with an MVNO This does not exist in the region Deutsche Telekom 34% 42% Etisalat ~55% ~85% KPN 46% 42% MEO 47% 52% Movistar 35% 49% Orange 43% 46% TIM 35% 49% Virgin 4% 20% 4

5 Flagship FMC bundles were launched in most markets when mobile ARPU was in sharp decline Mobile ARPU, selected European countries, Mobile competition 1 Bundles launched: France Orange Open; Germany Telekom MagentaEins; Italy Wind and Telecom Italia; Poland Orange Open; Portugal Meo M4O; Spain Movistar Fusión. 5

6 Data allowances for FMC and standalone bundles, selected European countries, 2015 Mobile competition FMC is not the end of standalone mobile plans: operators keep their high-end mobile tiers out in stable-arpu markets 6

7 Mobile impact FMC SIMs can climb up to 40% of all postpaid SIMs Percentage of contract SIMs that are part of an FMC bundle (excluding M2M),

8 Mobile impact Prepaid-to-postpaid migration is a common consequence of FMC bundling in many markets Postpaid percentage of subscribers before and after convergence, selected European countries 8

9 Mobile Net Promoter Scores are better for FMC than for standalone mobile fixed broadband acts as an anchor Mobile NPS for standalone mobile and FMC bundles, selected operators, 2015 Biggest change in score Mobile impact US operators have mediocre reputations for fixed broadband 9

10 Number of SIMs per FMC account is a key metric that relates to mobile market share changes Number of SIMs per FMC account, selected operators, 2015 Mobile impact High potential in UAE (GCC) households 10

11 Mobile impact Multi-SIM initiatives are used to capture as many SIMs as possible in a given household US-like shared data pools Explicitly multi-sim Head start with free SIM 11

12 Pricing Discounts at the entry level vary widely and are about closing gaps between operators offerings FMC discounts for basic plans (compared to standalone sum), selected European countries, 2016 FMC prices (USD, PPP-adjusted) for basic plans, selected European countries,

13 Pricing Incumbents want higher ARPU from high-end user segments, where they have some room for differentiation FMC prices for advanced plans (USD, PPP-adjusted), selected European countries,

14 Pricing FMC is not solely about discounting and price customers see other benefits Respondents overall mobile service satisfaction scores by bundle type, selected countries, Respondents mobile service satisfaction scores for price by bundle type, selected countries, Converged Standalone novelty of discounts decays, prices sometimes rise, discounts can be difficult to see. 1 Question: Please rate on a scale of 1 7 your satisfaction with the following aspects of your mobile service, n = Other service aspects included data allowance, data speed, customer service, voice/sms allowance and coverage. 14

15 Pricing Bundling tactics go beyond pricing they allow operators to target segments, pursue upsell and play to their strengths Highlight benefits instead of discounts Make standalone services less attractive MEO and NOS reserve top fixed broadband tiers for 3- and 4-play Reserve key services for FMC pay-tv at Movistar Spain Segmentation by selection of mobile plans Talk Talk s maximum quota is 2GB 15

16 How important is pay-tv for take-up of FMC bundles? Pay TV s role in FMC take-up is moderated by triple-play tradition Percentage of fixed broadband subscribers with FMC or pay TV, selected European countries, 2015 France, the Netherlands and Portugal: pay TV a near-must in FMC. FMC can grow without telco pay- TV tradition, too Italy, Spain and Turkey Light TV tactics used to compensate Pay TV as a new round of upsell and churn protection 16

17 What is the case for FMC in the UAE? Why does it matter to Etisalat? Etisalat favourably positioned in the market structure for FMC. The window for clear advantage in FMC may close. Etisalat can leverage its fixed broadband for mobile market share gain FMC could dilute value by lowering mobile ARPU. Etisalat can protect its fixed broadband base during liberalisation. FMC could provoke aggressive mobile pricing by an exposed player. Etisalat can reach out to households with du mobile subscriptions. Operators struggle to identify the next move in FMC innovation. The UAE market has a multiplay legacy of multiplay. FMC may not be urgently required in a two-player market. 17

18 Key takeaways 1 The market structure in the UAE is conducive to FMC, but the mobile market is relatively stable for heavy FMC discounts 2 FMC bundles are not just about discounts; bundling tactics can be used for segmentation and upselling 3 FMC is not urgently required in the UAE, but it may not hurt to experiment with loose bundles and limited discounting 18

19 Contact details Kerem Arsal Principal Analyst Boston Tel: Cambridge Tel: +44 (0) Madrid Tel: Manchester Tel: +44 (0) Dubai Tel: +971 (0) Milan Tel: Dublin Tel: +353 (0) New Delhi Tel: Hong Kong Tel: Paris Tel: +33 (0) London Tel: +44 (0) Singapore Tel: linkedin.com/company/analysys-mason youtube.com/analysysmason analysysmason.com/rss 19