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United Kingdom Telecommunications Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: October 2009 Product Code: R302-8620 Description In BMI’s United Kingdom Telecommunications Report for Q409 we have slightly adjusted our mobileforecasts and the historical data for mobile market leader O2 UK. O2’s parent company Telefónica hasrevised its historical data for O2 UK, to align the method used for counting mobile subscribers across thegroup’s operations. This resulted in the UK’s mobile subscriber base being higher than we had previouslybelieved, at 126.4% at the end of 2008.The main development in the UK telecoms market has been an end to speculation over the future of TMobileUK. In September 2009, T-Mobile’s parent company Deutsche Telekom, and France Telecom,the parent company of Orange UK, announced that they had agreed to merge their UK mobile units. Ifgiven regulatory clearance this will create a new mobile market leader with around 37% share of themarket and pave the way for huge cost savings. The reduction of the number of mobile network operatorsfrom five to four will relieve some of the intense competitive pressure on the mobile operators in what isoften cited as the most competitive mobile market in the region. The highly competitive nature of themarket has resulted in falling ARPUs and low margins for the operators, which according to theoperators, has threatened their capital expenditure requirements to develop their network infrastructure.The UK’s fixed-line sector remains in a steady state of decline as it continues to suffer from fixed-tomobilesubstitution and the growing popularity of VoIP services, in line with the rest of the region.Nevertheless, the UK is one of just three countries in the region to have fixed-line penetration still above50% at the end of 2008. The success of the UK in holding off fixed-line decline is driven by two factors. The first factor is the abundance of flat-rate tariffs offering inclusive minutes, which has resulted from theoperators looking to compete with mobile tariffs, and intense competition between the fixed-lineoperators such as incumbent BT and alternative operators Virgin Media and Carphone Warehouse. Thesecond factor which is stemming the decline in the sector is the popularity of ADSL broadband, whichcurrently requires a fixed-line subscription. Once ‘naked’ ADSL is allowed we are expecting a sharpdrop-off in the number of fixed-line subscriptions in the UK. The major developments in the broadband sector have been the further announcements of networkupgrades and expansions. The UK’s broadband speeds are relatively underdeveloped compared to someof its regional peers such as France and Germany, but commitments from incumbent BT and VirginMedia are resulting in network speeds progressing. This year has seen Virgin Media upgrade its cablenetwork to be capable of offering download speeds of up to 50Mbps, while BT has announced that it is inthe process of upgrading its ADSL network to ADSL2+ capable of offering download speeds of up to20Mbps and accelerating its fibre-optic network development plans. Table of Contents
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