Dutch mobile market

The market for mobile communication services in the Netherlands continues to grow and increased to 14.5 million mobile customers at the end of June 2004, up 16% from 30 June 2003 and 8% from 31 December 2003. In the period from June 2003, the operators added more than 1 million SIM cards to their installed base.

‘Prepay cards are the main driver in the market,’ according to Dirk Bout, who is responsible for Research and Advisory services at Telecompaper, ‘and accounted for 70% of net connections during the first six months of the year. In many ways this must be disappointing for operators, because they prefer to do business with people buying postpay subscriptions. Postpay subscribers normally spend more.’

Postpay customers represented 37% of the customer base at the end of June 2004, down from 38%, which was reached in June 2003.

While the customer base developed healthily in the first six months of this year, other indicators developed less well. ARPU, for example, which stands for Average Revenue Per User, fell during the first half of 2004 to EUR 33.1, down from EUR 35.0 in the first six months of 2003 and down from EUR 36.2 in the second half of 2003.

‘The decline stands out because ARPU has been going up over the last two years’ according to Dirk Bout from Telecompaper. ‘The ARPU indicator suggests that the average customer generates less revenues for the operator. This will ultimately lead to revenue pressures for operators if they can not keep up customer growth.’

‘In the market for mobile voice services, revenue pressures are already coming to the surface.’ says Bout. ‘Revenues in this segment of the market already dropped to EUR 2.46 billion during the first six months of 2004, down 2.5% from mobile voice revenues in the second half of 2003, but still up in comparison with mobile voice revenues in the first half of 2003.’

Mobile data services, on the other hand, grew to EUR 342 million and represent 12.2% of total mobile service revenues in the first 6 months of 2004, up from 10.1% in the first half of 2003.

‘Revenues from mobile data services are the future for any mobile operator,’ according to Bout, ‘so it is good to see revenues growing in this strategically important area. But their share in the overall market is still low, especially when you compare Dutch operators with operators in other countries.’

‘Another fact to keep in mind is that SMS is still the major revenue generator in the mobile data market. Exotic new services based on, for example, GPRS, UMTS or even WiFi are not significant in revenue terms, and that’s what all operators are aiming for’ says Bout.

Overall, the Dutch mobile communications services market generated EUR 2.8 billion in revenues during the first six months of 2004, up 7% in comparison with the first half of 2003, but down 1% in comparison with the second half of 2003.