Telsyte’s comments follow the release on Tuesday of its Australian Mobile Services Market Study 2020 which found the market grew by 332,000 SIOs (Services in Operation) for the six months to the end of December 2019, reaching around 36.3 million connections – the lowest recorded net increase since December 2013.
According to Telsyte, the modest growth underscored a mature sector under pressure before the COVID-19 pandemic, with annual services revenue declining by 4.1% to $13.3B in the 12 months to December 2019.
Telsyte says it anticipates annual mobile services revenue could decline by a further 10% in 2020 due to the potential slowdown in new SIOs, lower ARPU (Average Revenue Per User) and reduction in international roaming revenue as a result of travel bans.
Telsyte research shows around 15% of mobile users typically choose international roaming when travelling overseas.
Despite the “challenges”, Telsyte estimates Australia’s MVNO (Mobile Virtual Network Operator) market continued to buck the trend adding 265,000 services, compared to Telstra (up 159,000), Optus (up 104,000) and VHA (down 196,000) - with MVNOs such as amaysim, Aldi Mobile and new entrants Circle.life and Nu mobile all benefitting from consumers looking for better deals.
According to Telsyte “secondary connections” are likely to be impacted, with estimates that the total number of mobile SIOs will be flat or decline for the first time in the past decade if there is prolonged economic disruption due to the COVID-19 pandemic – ranging between +360,000 to -726,000 SIOs for the 12 months ending in December 2020. This compares to a net increase of 800,000 to 1.1 million SIOs annually since 2016.
“With the government’s economic stimulus packages announced, Telsyte expects most mobile users will keep their mobile service. However, restricted movement might see a reduction in the need for secondary SIMs for additional smartphones, tablets and other devices,” says Telsyte.
As with the increase in fixed broadband data consumption since the community lockdown, Telsyte says its latest carrier research shows mobile data usage is growing, with estimates the average monthly mobile data usage could grow more than 30% in 2020 (compared to 13% in 2019), averaging 8.4GB across all devices.
Despite increased data consumption and interest in 5G smartphones, Telsyte says it believes a slowing economy will likely cause consumers to double down and wait for the more affordable 5G handsets, impacting 5G services uptake.
Consequently, Telsyte’s 5G forecasts have been revised down by more than 50% to 2.4 million by the end of 2020. At the end of 2019 there was less than 150,000 5G mobile services in operation,” according to Telsyte estimates.
Telsyte says it still expects Apple to release a 5G iPhone (iPhone 12) in 2020 but cautions that supplies and demand might be affected as a result of the COVD-19 pandemic.
Despite this, Telsyte says it believes the increasing reliance on devices during the ‘stay at home’ period will eventually drive upgrades, not just for 5G, but for other smartphone features that can improve user experience for video communications, streaming entertainment and games services.
“The success of the iPhone in 2020 might be less about 5G and more about the other features that resonate with the stay-at-home users, such as screen quality and processor speeds,” Telsyte Managing Director, Foad Fadaghi, says.
“Half (50%) of all iPhone users indicate their iPhone is their main digital device according to recent Telsyte surveys.”
Telsyte anticipates the national auction for the valuable mmWave spectrum bands (used for the next evolution of 5G) will still likely go ahead in early 2021 but will be impacted by current market forces.
“The willingness to pay over the top for the spectrum could fall due to tougher economic conditions and declining industry revenue” Telsyte senior analyst Alvin Lee says.
However, skyrocketing fixed broadband usage is proving there is potential for gigabit services into the home (e.g. to support multiple concurrent high-resolution video streams), which can potentially be delivered via the new 5G spectrum.