June 1 2003

Mobile operators at last appear to be halting the long-term decline in average revenue per user (ARPU) - an essential step in ensuring continued revenue growth in the face of stagnating subscriber numbers - according to a new report released this week by Analysys. ARPU in Western Europe in 2002 averaged US$33.19 per user per month; the number of active subscribers is forecast to grow just 5% in 2003 to 309 million.

The report concludes that France, Germany, Spain and the UK all experienced growth in ARPU for their active subscriber bases during 2002, while Italy's ARPU remained almost flat, and Sweden's continued to decline.

"The main reason operators have been able to improve ARPU is because they are achieving big gains in revenue from non-voice services, which include person-to-person messaging and mobile entertainment services," says Katrina Bond, lead author of the report.

Analysys estimates that mobile operators in Western Europe generated an average of 12% of their revenue from non-voice services in 2002, but points out that some operators cited even more impressive figures. For example, in the final quarter of 2002, mmO2 obtained over 17% of its revenue from non-voice services in the UK and nearly 20% in Germany.

"We forecast that 24% of mobile service revenue will come from non-voice services by 2005 and 36% by 2008, with the bulk of that going to mobile operators," added Bond. "Person-to-person messaging has been responsible for most of the growth to date, and these services will continue to be important, but mobile entertainment services such as downloadable games will become increasingly significant revenue earners."

The report forecasts that, across Western Europe, person-to-person messaging will grow from US$13.9 billion in 2003 to US$21.4 billion in 2008 as this service extends from SMS to also include large volumes of multimedia messages and email. Meanwhile, mobile entertainment service revenue will grow from less than US$3.2 billion in 2003 to nearly US$11.7 billion in 2008.

However, the long awaited and much delayed 3G services will only account for 6% of subscribers and 6.5% of non-voice revenue in 2005. This not only widens the opportunity for GPRS, but also gives public wireless local area networks (WLAN) a greater opportunity to take hold. Analysys forecasts that 1.5% to 2.5% of annual 2.5G and 3G non-voice revenue could be lost to public WLAN by 2008, and that the loss could be as high as 8% amongst business customers.


 

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