Telco revenues may stagnate through 2015

Australian telecom operators are still grappling with a growth slump that started in 2011, and opportunities for service revenue growth are limited, according to a new report from telecom analyst firm BuddeComm.

The report said that Australian telecom service revenue is on track to decline slightly to $42.5 billion in 2013.

BuddeComm's report also predicted that growth will remain subdued in 2014 and 2015, with revenue either stagnating or growing at most 1-1.5% per year.

Revenues have been under pressure since 2011, due to increased competition among Telstra, Vodafone, Optus and others - as well as the ongoing economic uncertainties facing some Australian consumers.

Worse luck for telcos, Australian consumers would be unlikely to tolerate increases in prices for most fixed and mobile services. This leaves operators limited to pursuing further growth through LTE, fibre services and cloud data centres.

Telstra still dominates the Australian telecom market with a roughly 60% revenue share in 2013. But its market dominance has slowly been eroding since the early 2000s, when it peaked at around 80%.

Australia's mobile market is meanwhile reaching saturation point, with penetration exceeding 130% due to the large proportion of subscribers making use of multiple phones or SIMs.

Mobile service revenue growth fell year on year over the last financial year and BuddeComm is predicting slower revenue growth for Telstra and Optus and continuing negative growth from Vodafone. Due to the increasing saturation, mobile subscriber growth is likely to slow down over the next few years.

Another trend covered by the report is the increasing consolidation among second-tier telecom service providers. Consolidation has helped smaller providers recover in 2013 in terms of revenue growth. But at $3.9 billion, their total revenue still accounts for less than 10% of the total Australian telecom market.

Image courtesy of Stuart Pilbrow under CC