Market trends
Telstra’s Next G network is certainly one of the global mobile success stories. Not only has its rapid rollout been incredible, but also the way that it has serviced the market has been very successful. The market has also allowed Telstra to charge a premium price for its service, similar to, for example, the premium Hutchison was able to change when it was the first to launch a 3G service.

Telstra also caught Optus on the back foot. This company relies for the majority of its revenue on mobile and Telstra is now able to seriously undermining Optus’ position in this market. Vodafone is remaining in the position that it basically has had for the last 15 years. It has been unable to catch up with the big two, but at the same time has often proven to be a leader in innovative new products and pricing packages.

In a market that has already reached saturation, and where mobile call charges are declining, operators’ revenue growth will continue to taper off in 2009 and 2010; however, the revenue growth rate will remain well above the subscriber growth rate, largely due to increased revenue streams that the mobile operators are getting from 3G mobile data/mobile broadband.

Moving forward into 2009 and 2010, BuddeComm predicts that a trend slightly increasing ARPUs will continue, as the trend of increasing mobile data/3G revenues will continue to just outweigh the declining voice ARPUs due to falling mobile call pricing. The momentum gained by Telstra in 2007/08 of increasing ARPUs and market share is expected to continue into 2008/09, and this will place a lot of pressure on the rest of the market, in particular Optus, which in 2008 performed the worst of the four major mobile operators. For more information on market trends, see chapter 2, page 7.

Australian mobile market subscribers and annual growth - 2004 - 2011
Year ends Jun Subscribers (000s) Annual growth

• 2004 16,411 14.9%
• 2005 18,072 10.1%
• 2006 19,445 7.6%
• 2007 20,800 7.0%
• 2008 22,123 6.4%
• 2009 (e) 23,135 4.6%
• 2010 (e) 23,714 2.5%
• 2011 (e) 24,188 2.0%

Mobile data

There is a great deal of discussion going on about mobile data, wireless broadband and mobile media, but the reality is that mobile voice and SMS still generate 90% of mobile revenues. Full-blown, end-to-end IP-based wireless broadband infrastructure will not be in place until 2012-2015. So the changeover, especially over the next few years, will remain rather slow, with an initial change starting perhaps later in 2009 when Optus has its nationwide 3G HSDPA network in place.

Now with mobile wireless broadband we are starting to see people taking up an extra subscription - one for voice and one for data. This will continue for a while before we see more combined offerings.

3G networks

All four major mobile operators - Telstra, Optus, Vodafone and Hutchison - are well underway to completing faster 3G network upgrades. Telstra Next G network is the first step in a three-year plan. Optus’ HSPA network upgrade and build is scheduled for completion in 2010. Vodafone Australia national 3G HSPA will reach 95% of the Australian population and Hutchison plans to boost its coverage to 96% of the population during the first half of 2009.

The rapid growth in 3G subscribers is of course mainly due to substitution from 2G. By 2009, BuddeComm predicts that the 3G subscriber base will in fact surpass the 2G subscriber base total.

Handset market

A change is underway at the moment that is fundamentally reshaping the mobile vendor landscape. Vendor brand profiles are changing. Samsung, and LG and are on the rise. Sales of handsets are slowing down, mainly driven by economic developments. However, at the top-end of the market with iPhone and BlackBerry, there is a price war looming to accelerate growth in phone sales. The price of handsets is on the rise again, this time driven by more features which do appeal to the users. For more information on the handset market, see chapter 8, page 58.

Prepaid electronic payment services market Disasters like the exit of Bill Express from the electronic prepaid service market will only serve to make it more difficult for independent service providers to become involved in the mobile market, especially in such critical areas as bill payment. More stringent business checks have been put in place by the operators and this, of course, also caused them to look at other potential means of distribution, such as their own web-based recharging services. For more information, see chapter 11, page 87.

Key highlights:

• For the year to June 2008, the total mobile services market was worth $14.4 billion, with a growth rate of 9.6%. BuddeComm predicts this growth rate will gradually taper off further to around 8.3% in 2008/09, 8.0% in 2009/10 and 7.0% in 2010/11, when the market is expected to reach $18.0 billion.
• Telstra has now overtaken Hutchison as the market leader in the mobile broadband space, showing very strong overall mobile services revenue growth of 11.8% in 2008.
• Optus was the weakest of the mobile operators in terms of revenue growth in 2008, just 4.2%, behind Vodafone with 7.0%. For more information, see chapter 5.2, page 36.
• During 2007/08, Telstra consolidated its number one spot in the mobile market, gaining nearly a full percentage point, to take just over 44% of the overall market in terms of mobile service revenues.
• The Australian mobile market has reached the point of saturation and new growth is mainly coming from young people moving into the market. We predict that subscriber growth will subside to 6.4% in 2008/09, 2.5% in 2009/10 and reduce even further to only 2% in 2010/11.
• Moving forward into 2009, BuddeComm predicts that the gap between Hutchison and the rest of the market in terms of subscriber growth will begin to quickly diminish as the early competitive advantage it gained previously in the 3G space is being slowly eaten away.
• Telstra’s subscriber market share fell slightly in the year to June 2008 to 42%; however this drop was off a large base, and with strong 3G revenues, Telstra will continue to lead the mobile market moving forward. For more information, see chapter 6, page 43.
• Vodafone’s subscriber market share has been hovering around the 17% mark since 2006, and we predict it will maintain at this level moving forward into 2008/09.
• Optus also has a stable subscriber market share of around 33%, which should continue into 2008/09.

Data in this report is the latest available at the time of preparation and may not be for the current year.

For those needing high level strategic analysis, statistics and forecasts of Australia’s mobile market, this report identifies business opportunities, points out the hype and the pitfalls, and will be of assistance in making the right business decisions. It provides essential reading and gives in-depth information on:

• Mobile statistics, revenues, ARPU, market shares and forecasting to 2011, split by operator;
• 3G operators and network infrastructure overviews;
• Mobile handset market including key players and statistics;
• Mobile satellite market;
• Prepaid Electronic Services Market;
• Fixed-to-Mobile Convergence, Termination and Pricing;
• Mobile Spectrum Developments;
• Mobile retail market.