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Germany Telecommunications Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: October 2009 Product Code: R302-8501 Description Germany has retained its position in eighth place in our Business Environment Rankings despite itsTelecoms Market score being revised down on the back of falling ARPU rates, which are being drivendown by the ensuing economic contraction and intense competition. However, this was more than offsetby positive developments on the political front as we are expecting that a centre-right CDU-FDPgovernment will emerge from the parliamentary elections due on September 29, which would give themost market-friendly outcome and bodes well for policy continuity.The mobile market is characterised by a relatively high degree of prepaid subscriptions, which accountedfor 56.3% of the mobile market at the end of March 2009. This has left the mobile operators with anopportunity to migrate their prepaid subscribers onto postpaid contracts, which will help them boost theirARPU rates. However, as it stands they are failing to do this and the proportion of postpaid customers inthe country’s mobile subscriber base has been falling over the past few years. This is the result of a highlycompetitive prepaid segment bustling with MVNOs and competitive tariffs. Another upshot of a highproportion of prepaid subscriptions is that the market is likely to hold a significant number of inactiveSIMs, leaving further subscriber growth opportunities for the operators. Operator market shares have remained relatively stable over the past few years. T-Mobile continues to bethe market leader with a 36.4% market share at the end of Q109. Vodafone is not too far behindcontrolling 33.2% of the mobile market at the end of March 2009 and at the same time E-Plus and O2Deutschland held 16.9% and 13.6% of the market, respectively. The fixed-line market is in a state of decline having fallen by an estimated 4.5% in 2008 to a penetrationrate of around 44.0%. The main culprit for the sector’s decline is fixed-to-mobile substitution ascustomers drop their fixed lines in favour of the more expedient mobile services. Incumbent fixed-lineoperator Deutsche Telekom (DT) is the dominant operator in the fixed-line sector although its marketshare is waning as competition increases from alternative operators such as Vodafone and KabelDeutschland. To combat declining fixed-line revenues, the operators are increasingly looking to the broadband sectorand other growth markets such as IPTV. The second quarter of 2009 saw DT’s IP and internet revenuesoutstrip network communications revenues for the first time. Although broadband growth was somewhatdisappointing in 2008 at 13.3%, penetration remains mediocre at 27.3% at YE08. As the operatorscontinue to expand their networks, particularly into rural areas, broadband growth will be maintained. Meanwhile, the operators are also courting higher value customers such as those that take fasterbroadband connections and IPTV, which should help relieve ARPU pressures. Table of Contents
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