The Australian mobile broadband market is set to attain new levels of maturity with more players such as TPG seeking entry into this highly competitive arena. Apart from the three dominant telcos: Telstra, Vodafone, and Optus, Mobile Virtual Network Operators (MVNOs) have also re-emerged to claim a significant percentage of the growth in the mobile services market. This is according to research data gathered from Telsyte, an emerging technology analyst firm.
The appetite for low-cost mobile plans is driving the Australian telco industry into unprecedented competitive levels with MVNOs leading the charge. The half year to June 2017 performance, saw the mobile services market grow by a whopping 444,000 new Services in Operation (SIOs). Out of this, MVNOs accounted for 200,000. Collectively, this performance beats what Vodafone, Telstra, and Optus achieved at individual levels.
The Top Performing MVNOs
The Australian Mobile Services Market Study for financial year 2017 puts the total mobile services connections at 33.7 million. ALDImobile, Kogan Mobile, and Amaysim were ranked the top performing MVNOs. This metric was calculated based on the MVNOs net additions in the first half of the year. On the other hand, Amaysim, TPG, ALDImobile, and the Vocus Group made the cut as the top 4 MVNOs in Australia by market share in that order.
The Demand for Low Cost Plans
The average Australian consumer values pricing more than network performance in choosing a mobile services provider. Back in 2012, network performance was cited as the most crucial factor, but ever since, it has been overtaken by price. Based on the survey, if a subscriber is to change mobile providers, the competitor must have better price and promotions. The Australian mobile services market is in the pre-5G period and competition has shifted towards pricing of mobile plans.
The rise of non-contract handset plans was also noted. As a matter of fact, the research revealed that more than 50% of the handset plans are off contract. This is a trend that has been steady for quite a while now. As the research indicates, fewer of the off-contract plans, about 15% of them, have gone back to contract plans within the past 5 years.
The re-contracting of premium handsets such as Samsung Note 8 and iPhone X, however small, is likely to assist the Mobile Network Operators (MNOs) claw back on the market share they lost to MVNOs in the first half of 2017.
The percentage of iPhone sales in the second half of 2017 that will be through mobile contracts is estimated to go up to 65%. This favourably compares to the 50% recorded in previous years with the iPhone S models.
TPG’s Entrance Likely to Shake Up the Australian Telco Market
Until now, the key players in the mobile broadband market have been Telstra, Vodafone, and Optus. However, this is likely to change with TPG announcing its grand entry into the telco market. In its analysis Telsyte interprets the entry of TPG as a sign that the mobile consumer market is receptive to new competitors.
In a bid to find out the readiness of consumers to move to the new TPG network, Telsyte established that 40% of Australians aged 16 years and above would consider the move when the network is ready. That said, the move is conditional on TPG providing tangible benefits such as unlimited data, free trial periods, and significant bundling discounts.
How TPG is planning for a profitable entry by bringing in new services that do not simply attract bargain hunters is a subject many are waiting to see unfold.
In September 2016, TPG acquired iiNet with a vision to create the second largest ISP in Australia. This takeover enhanced the market share of TPG to 27%, 14 percentage points behind Telstra and 15% ahead of third placed Optus. ACCC concluded that the takeover would not lessen competition, and such didn’t see the need to oppose it.
Almost a year down the line following the merger and addition of iiNet subscribers to its customer base, TPG mobile base is still under pressure. According to Telsyte, TPG may have an impact, but reaching 1 million SIOs in a span of 2 years following the launch of its network, is a pipedream.
With MVNOs coming up strongly and posing a real threat to MNOs, TPG as well as the other carriers must broaden their focus over and beyond handsets if they are to grow SIOs in the years to come. Growth in handset services is likely to follow through the growth in population with Machine-to-Machine, wearables, and eSIM capable 2-in-1s presenting one of the best platforms and opportunity for carriers.