The Irish telecoms market has not been exempt from the stresses affecting the rest of the economy, putting operators under significant pressure. Both the mobile market and the dedicated mobile broadband market contracted in terms of subscriptions in H112, and there was only minimal growth in fixed broadband. There are, however, encouraging signs that operators are working to deal with these problems, not least of which is the decision of Vodafone and 3 to merge key parts of their networks in order to generate cost savings and push mobile broadband into underserved areas of the country.
- Mobile subscriptions declined 1.2% year-on-year (y-o-y) to the end of September 2012, as the market continued to be affected by the macroeconomic crisis.
- The third consecutive quarter of dedicated mobile broadband net subscription losses occurred in Q312. As a result, total subscriptions declined 4.6% y-o-y, leading us to revise our growth forecast for Ireland's broadband market.
- New data from 3 Ireland's parent company Hutchison Group show the operator to have a high proportion of postpaid subscriptions in its customer base (69%), while it also reports the highest ARPU in the market.
Key Trends & Developments
In H212 operators began to announce the roll-out of 4G LTE services in Ireland, signalling the start of a new era in the mobile market. In November 2012 Telefonica Ireland announced it would begin rolling out 4G network infrastructure in H113 after securing a combination of 800MHz, 900MHz and 1800MHz spectrum in the November 2012 auction. It paid EUR125mn for licenses for a 17-year period. Telefonica stated it planned to invest EUR200mn over three years to upgrade its network to 4G LTE. Meanwhile, incumbent Eircom, which owns the Meteor brand, stated that it plans to launch a 4G LTE network with speeds of 70Mbps from summer 2013. We expect the arrival of 4G LTE to boost wireless service operators via the development of higher value wireless service revenues. However, 4G also poses a threat to wireline operators, which may lose subscriptions to the rival service.
Although traditional wireline services are threatened by the speeds available via LTE, investment in higher capacity fibre technology will prove a buffer. In September 2012, Eircom announced the third phase of its fibre roll-out, stating total coverage will top 1mn premises by December 2014, having reached 150,000 by Q312. According to Eircom, it hopes the network will begin to deliver services (open to all operators) in H113, which we expect to increase demand for value added services such as HD pay-TV, multiscreen and video on demand.