Tag Archives: EE

BT to buy mobile firm EE for £12.5bn

EE shopEE will make BT into a leader in the 4G mobile market

Telecoms group BT has bought the mobile operator EE for £12.5bn.

The takeover creates a communications giant covering fixed-line phones, broadband, mobile and TV. Existing EE shareholders Orange and Deutsche Telekom will sell 100% of their shares.

Deutsche Telecom will hold 12% in the new combined business and have a seat on the board.

Orange will receive a 4% stake, as well as about £3.4bn in cash.

BT says it plans to raise £1bn through a placing of new shares to fund the deal.

“Start Quote

This is a major milestone for BT as it will allow us to accelerate our mobility plans and increase our investment in them”

End Quote Gavin Patterson BT chief executive

It said in a statement: “The combination of EE and BT will provide customers with innovative, seamless services that combine the power of fibre broadband with wi-fi and advanced mobile capabilities.”

Savings and revenues

EE leads the market in 4G, the fastest mobile bandwidth. It said on Thursday its 4G customer base had risen to 7.7 million subscribers.

EE chief executive Olaf Swantee said: “Today’s announcement will ensure the UK remains at the forefront of the mobile revolution, bringing even more innovation and investment in world leading connectivity for our customers.”

BT says that within four years, the deal will be saving it £360m a year in terms of operating costs and capital investment.

It added that by combining the two businesses, it should be able to generate an extra £1.6bn a year in sales.

BT Group

Last Updated at 05 Feb 2015, 10:47 *Chart shows local time BT Group intraday chart

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BT chief executive Gavin Patterson said: “This is a major milestone for BT as it will allow us to accelerate our mobility plans and increase our investment in them.”

He said the money being spent on the deal did not affect its plans ahead of the multi-billion pound Premier League rights auction, where it is in tough competition with rival Sky.

BT shares rose more than 2.5% on the London market, making the firm the top gainer on the FTSE 100 index.

crowd with phonesToo crowded – the UK telecoms industry looks set to consolidate

Consolidation

The mobile phone market is expected to consolidate further. Hutchison Whampoa, which owns rival Three, is said to be in talks to buy O2.

There has been speculation that Virgin may tie up with Vodafone.

And Sky has also announced the launch of its own mobile service, through a deal with O2’s network.

Dan Ridsdale, analyst at Edison Investment Research, said: “In the space of a few months, the UK telecoms landscape has changed enormously. As the majors fill in the gaps in their offerings, competition to offer multi-play bundles is going to step up significantly.

“Whether this will be beneficial for consumers is a very different question. The bundling of services makes it much more difficult to compare pricing, while more premium TV content is likely to move away from free to air.”

The BT-EE deal is expected to be finalised by March next year, subject to approval by shareholders of BT and scrutiny from the Competition and Markets Authority.

Source: BBC News

Consumers and businesses set to benefit from guaranteed £5b investment into UK’s mobile infrastructure

base stnCulture Secretary Sajid Javid today (Thursday) announces a landmark deal with the four mobile networks to improve mobile coverage across the UK.

As part of its long-term economic plan, the Government has secured a binding agreement with the mobile networks EE, O2, Three and Vodafone to tackle poor signal issues in so-called ‘partial not-spots’.

These are areas within the UK that have coverage from some but not all of the four mobile networks. Depending on the network consumers are on, they may have no coverage in these areas.

Under the agreement all four of the mobile networks have collectively agreed to:

  • a guaranteed £5bn investment programme to improve mobile infrastructure by 2017;
  • guaranteed voice and text coverage from each operator across 90 per cent of the UK geographic area by 2017, halving the areas currently blighted by patchy coverage as a result of partial ‘not-spots’;
  • full coverage from all four mobile operators will increase from 69 per cent to 85 per cent of geographic areas by 2017;
  • provide reliable signal strength for voice for each type of mobile service (whether 2G/3G/4G) – currently many consumers frequently lose signal or cannot get signal long enough to make a call; and
  • make the deal legally binding by accepting amended licence conditions to reflect the agreement – it will be enforceable by Ofcom.

No cash payments will be made by Government to the mobile networks as part of this agreement.

This deal will also result in cutting total ‘not-spots’ where there is currently no mobile coverage by two-thirds. This will support the Government’s existing £150m programme to take mobile coverage to the areas of the UK that have no coverage at all.

As a result of the agreement, many areas will receive better data coverage, some for the first time. During the recent consultation process, consumers made it very clear that they feel any solution should include better data coverage.

Culture Secretary Sajid Javid said:

“I am pleased to have secured a legally binding deal with the four mobile networks. Too many parts of the UK regularly suffer from poor mobile coverage leaving them unable to make calls or send texts.

“Government and businesses have been clear about the importance of mobile connectivity, and improved coverage, so this legally binding agreement will give the UK the world-class mobile phone coverage it needs and deserves. The £5bn investment from the mobile networks in the UK’s infrastructure will help drive this Government’s long-term economic plan.”

Whilst discussions with the mobile operators on a voluntary solution continued, the Government consulted on various legislative options in November 2014 to ensure that the issue of poor mobile coverage was addressed. This voluntary binding agreement secures a better deal for consumers and businesses as it:

  • will halve partial not-spots and reduce complete not-spots by almost two-thirds;
  • guarantees £5bn investment by mobile networks in the UK’s mobile infrastructure – potentially creating jobs and a boost for the UK economy; and
  • provides some of the best coverage of any major European country – underpinning the Government’s long-term economic plan.

As part of the agreement, the Government:

  • will bring this agreement to the attention of Ofcom in the context of their work to revise Annual Licence Fees – this is the subscription fee mobile networks pay Government;
  • intends to reform the out-dated and ineffective Electronic Communications Code to make it easier for the whole communications sector to rollout out new mobile and broadband services, and increase choice for consumers; and
  • is allowing many of the Government’s freehold buildings to be used as sites for mobile infrastructure – potentially opening up hundreds of sites to boost mobile coverage, including areas where is has been previously difficult to rollout network coverage.

EE CEO Olaf Swantee said:

“EE is focused on bringing the best voice and data service to its customers across the UK, and only last week announced 1,500 unconnected villages will soon benefit from EE coverage. This agreement ensures that our customers are able to stay connected in even more places up and down the country.”

Derek McManus, Chief Operating Officer of O2, said:

“A partnership between government and the mobile operators is required to maximise coverage across the UK, so this agreement is a good outcome for our customers. It will support investment in our network, while ensuring that strong competition remains between the different networks.”

Dave Dyson, Chief Executive of Three, said:

“We’ve doubled the size of our network in the past five years and we continue to invest to maintain a great network experience for our customers. Today’s agreement reflects the strength of our network today, our plans for the future and our commitment to bring its benefits to more people and more places than ever before.”

A Vodafone UK spokesperson said:

“We support the Government’s objective of delivering better coverage to rural areas including partial not spots. This is why Vodafone is already spending £1 billion on our network and services in the UK this year alone and will continue to spend a similar amount next year as well.

“The voluntary industry commitment we have agreed with the Government today will deliver 90 per cent of the UK’s land mass with voice services and a major improvement in mobile internet coverage as well. It is a great result for UK consumers and businesses and it will make the UK a leader across Europe in terms of the reach of mobile coverage.”

Mobile networks will now take forward their plans to improve mobile coverage and Ofcom will monitor progress regularly. The Secretary of State expects the operators to meet an interim goal in 2016, and will be receiving updates on this.

EE boasts record 4G additions in Q2; swings to net profit

EE, the largest mobile operator in the UK, claimed the best quarterly 4G performance ever recorded by a European operator with 1.3 million new LTE customers during Q2.

Overall growth in post-paid customers, B2B momentum, M2M traction, lower capex  – plus a sleeker operation – also helped EE make a modest H1 net profit of £1 million compared with a £86 million loss in the first six months of 2013.

“Today’s results demonstrate that consumers and businesses are responding to our strategy to provide the UK’s biggest, fastest and most reliable network,” remarked Olaf Swantee (pictured), CEO. “We are delivering on our goals to rapidly transition our pay monthly customer base to 4G, generate significant merger cost savings and improve our EBITDA margin performance.”

EE’s 4G subscriber base was 4.2 million as of 31 June. The operator reckons it is “firmly on track” to exceed its 6 million 4G target set for the end of the year.

Of its consumer and B2B subscriber base, EE reports that 60 per cent are on post-paid plans (Q2 2013: 55 per cent), which carry six-times higher ARPU than pre-paid customers.

EE says more than 5,500 corporates are now using its 4G services, while M2M connections were up 19 per cent during Q2, to 1.8 million.

H1 EBITDA margin was up 2.2 percentage points, to 21.1 per cent. EE attributes much of the improvement to network rationalisation and a trimming down of its retail operation.

A whittling down of the pre-paid base – reduced by 202,000 during Q2 alone – helps explain why H1 mobile service revenues dropped by nearly 2 per cent, to £2.8 billion.

Total H1 revenue, which includes equipment, fixed broadband and wholesale revenues, was £3.11 billion (H1 2013: £3.21 billion).

While EE trumpets a low 1.1 per cent churn rate for post-paid consumer and business customers, this has come at a price. Subscriber retention costs (per gross addition), according to EE, were up 15 per cent, to £193, during Q2.

EE had a total of 30.8 million connections as of 31 June, down 0.8 per cent from 12 months previously.

Source: Mobile World Live

Small business special report: Demystifying the cloud and mobile for SMES

small_business_3v2

Cash flow and growth are two of the main issues that dominate the time and effort of small business owners, managers and employees.

Traditionally small businesses have been regarded as technology laggards without the necessary capital investment or the in-house technical expertise to adopt the latest technologies used by their larger corporate brethren.

But today technology offers small businesses a level playing field that enables them to compete with much larger rivals – and the barriers to entry are often surprisingly low.

Faster mobile connectivity and smarter devices enable owners and employees to work and access vital business data from almost any location or device. Meanwhile cloud-based apps give small firms access to enterprise-grade systems and functionality on an affordable, pay-as-you-go basis – all without the huge capital investment traditionally required to build systems in-house.

Allied to all this is mobile security – of devices, apps and information – that enables people to use their mobile devices as true business tools and be productive whether in the office or out on the move.

Here is just a selection of our best articles for small businesses to help you understand and reap the benefits of these technology trends.

1. The 3 most important challenges for small businesses today

UK small businesses have been particularly hard hit by the global financial crisis. But as the economy emerges from recession we take a look at the key challenges facing SMEs today.

2. How small businesses can tackle the fear factor and reap the benefits of the cloud

Many small-business owners are wary of the cloud and yet it is something they use every day in their personal lives through services such as Gmail, Spotify and social media. We look at how using cloud-based applications can work in a business context for small firms.

3. Silver linings – how the cloud is the big leveller for small businesses and start-ups

The cloud can represent a less risky, more flexible and ‘greenfield’ IT option for some start-ups and small firms. They can access enterprise-grade business applications using the software-as-a-service (SaaS) model.

4. Why security is the key to unlocking the full value of the mobile workforce

The combination of powerful mobile devices, faster connectivity and cloud-based business apps has created a perfect opportunity for boosting mobile working. Mobile security is the key to unlocking these benefits, enabling employees to securely access business apps and content from any device and any location.

5. How SMEs can tackle mobile security without breaking the bank

For cash-strapped smaller businesses it is a constant challenge to balance the productivity benefits of enabling mobile working with the security risks. But from strong usage policies to cloud-based security management we explore some of the key steps SMEs can take to mitigate mobile security threats and risks.

6. 5 basic mobile security tips for small businesses

Without in-house tech specialists or budget, security is often still seen as too costly and complex for many small businesses. But in this mobile-first world small firms can no longer afford to ignore it. Here we outline a very simple mobile security setup that all small firms should have as a minimum.

7. What small businesses need to know about the legal and security risks of offering public wi-fi services

Offering public wi-fi is a great way for SMEs to increase customer footfall and loyalty but it doesn’t come without risks. For example what is an SME’s liability if someone uses that wi-fi network (in a small coffee shop for example) for illegal activity? This article outlines some of those risks and ways that SMEs can tackle them.

8. 4 tips for holiday work/life balance

Holidays mean well-earned downtime but small business owners and employees often need to do at least some work. How do you juggle both things and stay sane? The following tips show how to make technology work for you – not the other way around.

9. 5 ways small businesses can avoid a nasty mobile roaming bill shock

Unexpected mobile data costs are a big issue for many small businesses, particularly from overseas roaming. We look at five ways of keeping tabs on data usage and avoiding any nasty surprises.

Source: EE

EE unveils plans to increase 4G accessibility and transform the user experience as 4G overtakes 3G

  • EE reaches tipping point as 4G contract sales outstrip 3G, and 3.6m customers sign up to superfast internet on the move
  • Completes second phase of rural roll out bringing 4G to 2,588 villages and small towns, and doubles footprint of unique double speed network
  • Evolves 4G access with market-leading 4G WiFi plans and introduces own-brand 4G WiFi device range – including the UK’s first 4G in-car WiFi
  • EE founding member of the Mobile Video Alliance, enabling content owners to provide first class mobile video and TV experience

EE, the UK’s most advanced digital communications company, today unveiled the next phase of its world class 4G service, including rapid network expansion and the launch of new 4G plans and devices. The company will dramatically improve accessibility of superfast mobile internet across the UK, and set a new benchmark for the 4G user experience.

The move comes as EE 4G customer numbers hit 3.6 million and sales of EE 4G plans outstrip 3G for the first time, representing a tipping point for the business. 4G is rapidly changing mobile behaviour, with customers increasing their data usage by 66% in a year – watching more television and video, working, banking and shopping on the go.

Olaf Swantee, CEO of EE, said: “With more experience of 4G than any other UK operator, we have unique insight into how the technology is changing behaviour. Our mobile devices have effectively become mini TVs with video traffic already making up over half the data on our 4G network.

“We’re committed to remaining one step ahead – adapting our network to make 4G available where it matters most, with a focus on more rural areas, transport links and offering our customers the best network experience and great value, innovative devices and plans.”

RAPID NETWORK EXPANSION

EE is accelerating network rollout in rural areas and on transport routes, as well doubling the footprint of its unique double speed network, meeting the growing demand for consistently fast speeds across the busiest areas of the UK.

1.  Rural revolution: EE completes second phase of rural roll out
EE is bringing the UK’s fastest network to 2,588 villages and small towns with populations under 10,000, including many rural areas. From Silverburn in Scotland with less than 65 people, to Aberdulais in South Wales with 500, more than three million people in rural areas now have access to a mobile network to rival the UK’s largest cities.

Businesses and residents in many of those rural areas of the UK will now have access to high speed internet in the home or office for the first time, with 4G speeds often faster than the fixed line connection they previously depended on.

2.  4G in the fast lane
In addition to residential zones, EE is focusing on areas of high usage, including airports, roads, and train lines and stations. 47 major train stations and 22 of the busiest airports, from Bournemouth to Aberdeen, are now 4G-enabled, along with upwards of 50% 4G coverage on 50 of the busiest motorways and A-roads. Coverage of major roads in more built up areas, such as the M25 and M62 is greater than 80%.

The ongoing investment forms part of EE’s plan to offer a superfast digital network in the places customers want it the most, recognising the increasing need for a reliable, high-speed data connection on the move to support in-car navigation and passenger data usage.

By enhancing the 4G network on the busiest roads in the UK, EE will allow business customers to remain productive on the move. A programme is in place to cover the busiest motorway service stations, completing the connected journey.

3.  Extending EE’s unique double speed 4G network
EE will double the footprint of its unique, high capacity network to 40 towns and cities by the end of the year, allowing millions more customers to enjoy the UK’s fastest speeds, and targeting the parts of the country where data usage is showing the quickest growth.

EE’s double speed network ensures that its customers are guaranteed the best mobile experience, whether that’s downloading large files, uploading images or streaming video.

REDEFINING THE 4G WiFi MARKET

From 28 May, EE is introducing a range of EE-branded 4G broadband devices and plans, designed to take advantage of EE’s double speed network. Available on pay as you go (PAYG) and consumer and business pay monthly plans, the devices include:

  • The UK’s first 4G car WiFi – the ‘Buzzard’ is the first in a series of superfast in-car devices available direct from EE. The simple and affordable plug-and-play device (only £49.99 on PAYG) will enable any car with a 12v connection to instantly become a 4G WiFi hotspot for up to 10 connections, and avoid the need for expensive in-built solutions. It also comes in a unique storage container designed to sit conveniently in a cup holder.
  • Superfast 4G for work and play – EE is introducing two new 4G WiFi devices optimised for EE’s double speed 4G network. For busy professionals a new sleek pocket-sized premium device called the ‘Kite’* (£69.99 on PAYG); and for a younger audience, the UK’s most affordable 4G WiFi unit – the colourful and rugged ‘Osprey’ (only £49.99 on PAYG).
  • The UK’s most affordable 4G tablet – with the ‘Eagle’, an Android tablet offering specifications and features traditionally associated with more expensive devices for just £199 on PAYG or £49.99 on 24 month pay monthly plans of £15 and above.

In support of the new devices, EE is also introducing the UK’s best value set of 4G WiFi plans. A new range of 24 and one month plans will be available, offering a variety of data allowances for unparalleled value and choice. New plans for small businesses will also be available.

The Buzzard, Kite and Osprey will be available on EE’s Shared plans, as well as the new 4G WiFi pay monthly plans, and are free on 24-month plans of £15-per-month and over.

THE BEST 4G EXPERIENCE

Video usage on the EE network has risen significantly in recent months, and early findings from EE’s latest Mobile Living Index* reveal that the video experience is now as important as making calls and web surfing for 4G customers. Video and TV are expected to increase data traffic 1100% in the next four years, and will be more than two thirds of data on the network by 2018.

To meet growing customer expectations, EE is putting the video experience at the heart of its network plans, ensuring content owners can give customers a reliable, high-quality, user experience.

On the 20th May, Minister Ed Vaizey announced the launch of the Mobile Video Alliance (MVA), founded by EE and run by the Digital TV Group (DTG), which represents the UK’s broadcast industry. The MVA connects broadcasters and content owners with mobile operators for the first time to create the best possible experience of mobile video apps. Broadcasters have mastered content delivery in the home, to the web, and now they’re focusing on the third axis – mobile platforms.

EE has also embarked on a programme for selected video and TV content owners, who desire an optimum user experience for their customers over EE’s 4G network. For example, work with the BBC iPlayer team has already seen significant improvements for their customers on the speed of programme load times.

Source: EE

EE on track for 6M 4G customers by end 2014

EE on track for 6M 4G customers by end 2014; Q1 revenue dips


EE shopfront

UK number-one operator EE said it is “on target to exceed six million 4G customers by the end of 2014”, as it also revealed a drop in revenue for the first quarter of 2014.

The company added 889,000 4G customers during the period to take its total to 2.9 million. Last week, it said that the seaside town of Rhyl in North Wales had become its 200th to gain LTE services, with national population coverage now at 72 per cent.

During the quarter, operating revenue decreased by 1.7 per cent to £1.49 billion, with the company noting mobile termination rate and roaming rate cuts. Excluding these, there would have been a 0.8 per cent year-on-year increase.

Average revenue per user for mobile services increased 2.2 per cent after the regulatory cuts (up 5.1 per cent excluding the mandated changes). Data (non-text) revenue increased by 11 percentage points to make up 47 per cent of ARPU.

With the company offering 4G tariffs based on speed, the company said that these tiered plans are “driving growth in average access fees”. More than one-in-four new customers are opting for double-speed plans, which are supported by the operator’s network in the UK’s 20 largest cities.

During the quarter, EE saw postpaid mobile net additions of 214,000 including M2M, with 59 per cent of its consumer/B2B base on contract plans, which deliver six times higher ARPU than prepaid. Its prepaid base shrank by 321,000.

It recently announced new entry-level 4G plans.

Away from its mobile operations, EE said that its fixed revenue increased by 12.5 per cent year-on-year, marking its nineth consecutive quarter of growth. Fixed broadband subscriber additions of 20,000 were attributed to “attractive combined fixed/mobile promotions”.

Source: Mobile World Live

Transport for London looking to introduce smartphone based fare payments

 

London Underground

With NFC on your smartphone, using it to pay for your morning commute across London may be getting closer to reality. According to a report in the Financial Times, carriers EE and Vodafone have begun talks with Transport for London over beginning trials of a mobile wallet to pay for your travel.

The initial trial is expected to be a “pay as you go” scheme using apps owned by the mobile operators that can be preloaded with money. Operators could also consider payment for tickets on a weekly or monthly basis, according to a person familiar with the plans.

The barriers at London Underground stations will work with smartphones for NFC payments, though that facility would need to be activated first. With the successful Oyster card scheme costly for TfL to run, they’re opening up to other methods of contactless payments for travellers.

Source: Financial Times

EE details LTE-A plans

Olaf Swantee, CEO of the UK’s number-one operator EE, said the company plans to offer LTE-Advanced services in central London by the end of the summer.

In an exclusive interview with Mobile World Live, Swantee said the technology will enable theoretical peak speeds of 300Mb/s, and will later rollout everywhere within the M25 motorway.

“That effectively means that customers will see yet another jump in the speed of LTE,” Swantee noted.

Swantee also talked up EE’s progress with 4G. “We have great coverage now,” he said, noting that 45 million people in more than 170 cities can now access EE’s LTE network.

The operator now has more than two million subscribers using its 4GEE services.

“We are very pleased with the 4G success in the UK. There is an appetite for faster speeds and better networks,” Swantee said.

Now that the other UK mobile operators are offering 4G services (EE was the first to offer LTE in October 2012), Swantee said EE will compete by rolling coverage out more quickly than its rivals and “constantly differentiate through speeds”.

EE’s spectrum holding means it can offer single and double-speed LTE, with up to 30 per cent of commercial transactions using the faster service. “Customers recognise that when they use video or TV, it does make a difference.”

Along with the data speeds, EE’s CEO noted that voice remains a key element in an operator’s armoury and the company recently outlined a £279 million investment plan to upgrade EE’s oldest network equipment to improve voice services.

“I have learned 4G is the key anchor point of differentiation and network differentiation is possible, but network differentiation is not possible without looking at voice. Do not treat voice as a commodity,” Swantee said.

Turning to voice-over-LTE (VoLTE), Olaf said that this is only really important for operators who use very different spectrum for voice and 4G.

However, he noted that rural areas may benefit from the use of VoLTE in the future as EE looks to improve coverage in these areas using spectrum in the 800MHz band.

Source: Tim Ferguson Mobile World Live

4G driving data usage but not all markets reaping the rewards


NEW ANALYSIS: ‘Digital pioneers’ are seeing a positive impact from 4G but Europe is still struggling, says a new report from GSMA Intelligence.

The rapid migration towards 4G-LTE in the world’s most advanced mobile markets is driving a surge in data usage, with 4G users typically consuming twice as much data per month as other users. However, while the introduction of 4G has led to an uplift in ARPU in some instances, the impact on revenue varies widely depending on the market.

As the only major market to have reached 100 per cent 4G population coverage, South Korea is the world’s most advanced 4G market, with penetration as a percentage of total connections passing the 50 per cent mark in Q4 2013. This compares to around a quarter 4G user penetration in Japan and the US.

Market-leader SK Telecom’s average monthly data consumption per user has risen significantly since the launch of its 4G network in H2 2011. The average monthly data consumption of its 4G users approximately doubled between Q4 2011 and Q1 2013, rising from 1.1 GB to 2.1 GB, while data usage via HSPA remained flat. This means that the operator’s total 3G/4G data traffic almost doubled in the space of 15 months, despite only a 2 per cent growth in total connections.

With such extensive 4G coverage available in the country, users in South Korea have also begun to eschew Wi-Fi networks – continuing to use 4G even when Wi-Fi is available – to maintain the consistency of their experience, especially when the 4G network provides a faster download/upload speed than a Wi-Fi service.

Although this trend is putting increasing strain on their networks, South Korean operators are generating significantly increased revenue from their 4G customers. At KRW46,000 ($43), SK Telecom’s 4G ARPU in Q3 2013 was around 32 per cent higher than its blended ARPU, with the operator noting that more than 70 per cent of new and upgrading 4G customers were opting for its higher-priced tariffs. Meanwhile, rival KT’s 4G ARPU of KRW44,000 ($42) was more than 40 per cent higher than blended ARPU.

Operators in the US are seeing similar trends. In October 2013, Verizon Wireless – the largest 4G operator globally with 36 million 4G connections in Q3 2013 – announced that those 38 per cent of its retail customers connected to its 4G network were responsible for 64 per cent of its total data traffic. The operator’s Q3 2013 ARPA (average revenue per account) was up 7.1 per cent on a year earlier, and has increased by 21 per cent since the launch of its 4G network in Q4 2010. Similarly, Cricket Communications CEO Jerry Elliot said in August 2013 that its “usage from a 4G customer is about twice that what it is for a 3G customer.” The operator’s ARPU was up 8.4 per cent year-on-year to reach $45.45 in Q3 2013.

In regions such as Europe the migration towards 4G is at a significantly earlier stage. This means that, while they have reported similar trends in terms of data consumption, operators in these regions are not yet seeing the same positive impact on revenue from 4G as witnessed in ‘digital pioneer’ markets such as South Korea, the US and Japan.

For example, in Q1 2013, Vodafone reported that average monthly data usage for its 4G smartphone users in Europe was 640 MB, approximately twice that for a 3G smartphone (350 MB) and roughly the same as a tablet operating on 3G. In Germany, Vodafone’s rival O2 said in Q3 that monthly average data consumption by smartphones using 4G services was three times that of non-4G smartphones.

In terms of revenue, the UK’s EE observed in its Q2 2013 report how an “increase of nearly 10 per cent was witnessed in the ARPU for existing customers migrating to 4G by June 2013”, and in its Q3 2013 report that “existing consumers migrating to 4G continue to show high single digit ARPU uplift.” This contributed to a slight annual rise in blended ARPU (+0.5 per cent), to £19.00 ($29.45) in Q3 2013.

This is a fairly modest increase compared to EE’s counterparts in South Korea and the US, but one which would surely be welcomed across the channel in France, where the expected ARPU uplift from 4G has evaporated for the three largest operators after low-cost rival Free Mobile introduced a 4G offering at no additional charge to its existing 3G service. This month, Orange France was forced to cut its lowest 4G tariff to €24.99 ($33.99) per month (via its SoSh low-cost unit), to ward off competition from Free, which offers 4G plans starting at just €19.99 ($27.19) per month. Similarly, second-placed French operator SFR has dropped its entry-level 4G tariff to €25.99 ($35.35) per month.

The average ARPU in France was down 13.2 per cent year-on-year in Q3 2013 to €22.82 ($30.23), and despite Bouygues Telecom, Orange and SFR all hitting 1 million 4G connections by the end of 2013, we expect to see the downward ARPU trend continue when those operators report their Q4 2013 financial results.

But France isn’t the only market where an operator has chosen to offer 4G services without charging a premium. For example, 3UK, which switched on 4G last month, is allowing customers to migrate without switching from their 3G contracts and will continue to offer unlimited data allowances. Telefonica Movistar – the market leader in Spain – is also offering 4G at the same price as 3G alongside a host of other incentives.

SK Telecom, average monthly data consumption per connection, Q2 2010 – Q1 2013
Source: SK Telecom

gsmai table

 Source: Calum Dewar GSMA

4G driving data usage but not all markets reaping the rewards

4G driving data usage but not all markets reaping the rewards


NEW ANALYSIS: ‘Digital pioneers’ are seeing a positive impact from 4G but Europe is still struggling, says a new report from GSMA Intelligence.

The rapid migration towards 4G-LTE in the world’s most advanced mobile markets is driving a surge in data usage, with 4G users typically consuming twice as much data per month as other users. However, while the introduction of 4G has led to an uplift in ARPU in some instances, the impact on revenue varies widely depending on the market.

As the only major market to have reached 100 per cent 4G population coverage, South Korea is the world’s most advanced 4G market, with penetration as a percentage of total connections passing the 50 per cent mark in Q4 2013. This compares to around a quarter 4G user penetration in Japan and the US.

Market-leader SK Telecom’s average monthly data consumption per user has risen significantly since the launch of its 4G network in H2 2011. The average monthly data consumption of its 4G users approximately doubled between Q4 2011 and Q1 2013, rising from 1.1 GB to 2.1 GB, while data usage via HSPA remained flat. This means that the operator’s total 3G/4G data traffic almost doubled in the space of 15 months, despite only a 2 per cent growth in total connections.

With such extensive 4G coverage available in the country, users in South Korea have also begun to eschew Wi-Fi networks – continuing to use 4G even when Wi-Fi is available – to maintain the consistency of their experience, especially when the 4G network provides a faster download/upload speed than a Wi-Fi service.

Although this trend is putting increasing strain on their networks, South Korean operators are generating significantly increased revenue from their 4G customers. At KRW46,000 ($43), SK Telecom’s 4G ARPU in Q3 2013 was around 32 per cent higher than its blended ARPU, with the operator noting that more than 70 per cent of new and upgrading 4G customers were opting for its higher-priced tariffs. Meanwhile, rival KT’s 4G ARPU of KRW44,000 ($42) was more than 40 per cent higher than blended ARPU.

Operators in the US are seeing similar trends. In October 2013, Verizon Wireless – the largest 4G operator globally with 36 million 4G connections in Q3 2013 – announced that those 38 per cent of its retail customers connected to its 4G network were responsible for 64 per cent of its total data traffic. The operator’s Q3 2013 ARPA (average revenue per account) was up 7.1 per cent on a year earlier, and has increased by 21 per cent since the launch of its 4G network in Q4 2010. Similarly, Cricket Communications CEO Jerry Elliot said in August 2013 that its “usage from a 4G customer is about twice that what it is for a 3G customer.” The operator’s ARPU was up 8.4 per cent year-on-year to reach $45.45 in Q3 2013.

In regions such as Europe the migration towards 4G is at a significantly earlier stage. This means that, while they have reported similar trends in terms of data consumption, operators in these regions are not yet seeing the same positive impact on revenue from 4G as witnessed in ‘digital pioneer’ markets such as South Korea, the US and Japan.

For example, in Q1 2013, Vodafone reported that average monthly data usage for its 4G smartphone users in Europe was 640 MB, approximately twice that for a 3G smartphone (350 MB) and roughly the same as a tablet operating on 3G. In Germany, Vodafone’s rival O2 said in Q3 that monthly average data consumption by smartphones using 4G services was three times that of non-4G smartphones.

In terms of revenue, the UK’s EE observed in its Q2 2013 report how an “increase of nearly 10 per cent was witnessed in the ARPU for existing customers migrating to 4G by June 2013”, and in its Q3 2013 report that “existing consumers migrating to 4G continue to show high single digit ARPU uplift.” This contributed to a slight annual rise in blended ARPU (+0.5 per cent), to £19.00 ($29.45) in Q3 2013.

This is a fairly modest increase compared to EE’s counterparts in South Korea and the US, but one which would surely be welcomed across the channel in France, where the expected ARPU uplift from 4G has evaporated for the three largest operators after low-cost rival Free Mobile introduced a 4G offering at no additional charge to its existing 3G service. This month, Orange France was forced to cut its lowest 4G tariff to €24.99 ($33.99) per month (via its SoSh low-cost unit), to ward off competition from Free, which offers 4G plans starting at just €19.99 ($27.19) per month. Similarly, second-placed French operator SFR has dropped its entry-level 4G tariff to €25.99 ($35.35) per month.

The average ARPU in France was down 13.2 per cent year-on-year in Q3 2013 to €22.82 ($30.23), and despite Bouygues Telecom, Orange and SFR all hitting 1 million 4G connections by the end of 2013, we expect to see the downward ARPU trend continue when those operators report their Q4 2013 financial results.

But France isn’t the only market where an operator has chosen to offer 4G services without charging a premium. For example, 3UK, which switched on 4G last month, is allowing customers to migrate without switching from their 3G contracts and will continue to offer unlimited data allowances. Telefonica Movistar – the market leader in Spain – is also offering 4G at the same price as 3G alongside a host of other incentives.

SK Telecom, average monthly data consumption per connection, Q2 2010 – Q1 2013
Source: SK Telecom

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