New Market Study Published: Austria Telecommunications Report Q2 2013

BMI View: Austria's all-important mobile market reported slower than expected growth in 2012 as the weaker domestic economy weighed on consumer spending and made operators' low-cost 'no frills' services more appealing than ever. Market saturation also has a role to play in the slowdown of growth and operators must work harder to extract more value from the customers they already have. The postpaid user base contracted slightly as a result and was buoyed only by the higher value service from 3 Austria. This leaves some interesting opportunities in the MVNO space, and Tele2 and UPC appear to be ready to move in on the converged services opportunity.

Key Data

* Price competition and cuts to mobile termination rates continued to drive down monthly ARPU in the mobile market. Data reported by Telekom Austria and T-Mobile showed respective declines of 8.8% and 11.1% y-o-y to Q412.
* Data from Telekom Austria indicated the first signs of IP substitution, with total SMS sent down 10.3% y-o-y to 724.3mn in Q412.
* Restated regulatory data show the number of fixed broadband subscriptions declined in Q212, albeit only marginally. This could however signal a plateauing of the market as a result of saturation and competition from dedicated mobile broadband services.

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Full Report Details at
- http://www.fastmr.com/prod/554002_austria_telecommunications_report_q2_2013.aspx?afid=301
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Key Trends & Developments

The acquisition of Orange by Hutchison Whampoa was completed in January 2013 after the European Commission and domestic regulatory authorities approved the deal in December 2012. The merger reduces the number of operators in the market from four to three. However, the approval was conditional upon procompetition measures as part of a commitments package to enable the entry of new players in Austria.

These commitments include the divestment of spectrum, and additional rights to a new entrant in Austria. H3G also committed to provide, on agreed terms, wholesale access of up to 30% of its network capacity to up to 16 MVNOs in the next 10 years.

While consolidation offers operators the prospect of relief from the intense price competition that has seen ARPUs slide in 2011 and 2012, other threats exist. At the time of writing operators are awaiting confirmation of the final decision regarding mobile termination rates (MTR) in Austria. The current average MTR is EUc2.01, which was in place for the whole of 2012, but from July 2013 the rates are currently scheduled to decline to EUc0.8. Meanwhile a decline in usage of high margin SMS services also appears to

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