MVNOs lead the charge as price competition heats up in mobile services

Australians showing conditional interest in a fourth mobile operator

Australians appetite for lower costs mobile plans is growing according to a new study by emerging technology analyst firm Telsyte.  MVNOs (Mobile Virtual Network Operators) re-emerged as the growth leader in the first half of 2017, with over 200,000 new SIOs (Services In Operation) collectively, beating the individual performance of Optus, Vodafone and Telstra (in that order) according Telsyte’s Australian Mobile Services Market Study FY2017.

Overall the mobile services market grew by 444,000 in H1, 2017 to reach 33.7 million connections.

The top performing MVNOs in the first half of 2017 were ALDImobile, amaysim and Kogan Mobile. The Top 4 MVNOs according to Telsyte were amaysim, TPG, ALDImobile and Vocus.

According to the latest Telsyte’s research, price or value has risen to overtake network performance as the most important factor when the average consumer chooses a mobile services provider.

Network performance had been the most important factor as rated by consumers since 2012. Similarly, the main two reasons survey respondents indicated they are considering changing mobile providers was price and promotions from a competitive provider.

“We are entering an increasingly price competitive mobile services market in this pre-5G period” Telsyte senior analyst Alvin Lee says.

According to Telsyte’s research, over half of handset plans are on non-contract plans. This trend has been steady for many years, however new research shows that very few (15%) that have gone off contract plans have gone back to them in the last 5 years. 

Despite this, re-contracting of premium priced handsets such as the iPhone X and the Samsung Note 8 are likely to help the Mobile Network Operators (MNOs) fight back in the second half of 2017.

Telsyte estimates up to 65 per cent of iPhone sales in 2H 2017 will be via mobile contracts, compared to around 50 per cent in previous iPhone “S” model years.

Fourth mobile network set to shake up the Australian market

Telsyte analysis of the potential impact of TPG’s announcement that it plans to roll out a fourth Australian mobile network shows consumer are generally receptive to a new competitor in the market.

Telsyte research indicates 2 in 5 Australians (16 years and over) would consider moving to the new TPG mobile network when it is ready. However, most of this is conditioned on TPG providing clear benefits such as free trial periods, unlimited data or significant bundling discounts.

“The challenge for TPG will be to profitably bring new services to market without simply attracting bargain hunters” Lee says.

TPG mobile base has been under pressure, despite the addition of iiNet customers. While the new network is expected to have an impact, Telsyte believes it will be difficult for the carrier to reach 1 million SIOs within 2 years of launching its network.

TPG and other carriers will need to broaden their focus beyond handsets to grow SIOs in coming years. The growth of handset services is expected to only follow population growth, with wearables, Machine to Machine and eSIM capable 2-in-1s presenting the best opportunities for carriers in the next 2 to 3 years.

For further information on the study or media enquiries contact:

Alvin Lee
Senior Analyst
Tel: +61 2 9235 5890

Foad Fadaghi
Managing Director
Tel: +61 2 9235 5851

Telsyte’s Australian Mobile Services Market Study FY2017 is a comprehensive study which provides subscribers with:

  • Market sizing and forecasts of the Australian mobile services market
  • Analysis of market share and carrier performance
  • End-user trends
  • Market trends
  • Mobile services market KPIs

In preparing this study, Telsyte used:

  • Interviews conducted with executives from mobile service providers, device vendors and retail channel partners.
  • An online survey of a representative sample of Australians 16+ years of age conducted with 1,056 respondents in August 2017.
  • An online survey of a representative sample of Australians 16+ years of age conducted with 1,060 respondents in November 2016.
  • Financial reports released by service providers.
  • On-going monitoring of local and global market and vendor trends.

About Telsyte
Telsyte is Australia’s leading emerging technology analyst firm. Telsyte analysts deliver market research, insights and advisory into enterprise and consumer technologies. Telsyte is an independent business unit of DXC Technology.

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