Switzerland's mobile market had a mixed 2012, but remains one of the most lucrative markets in Western Europe, and globally. Subscription growth continued and LTE was launched in 2012. However, at the same time ARPU declined sharply. Even after this decline, Switzerland remains one of the highest value mobile markets globally, underpinned by high incomes and demand for advanced services. We believe it has subscription growth potential exceeding many of its developed market peers, while high incomes and technological literacy creates strong foundations for higher capacity service growth ie fibre and LTE. The outlook is bright for the wireless and wireline markets, despite the squeeze from market saturation and threats to traditional revenues from IP alternatives.
- Mobile subscription growth continued in 2012, with the total up by 2.5% y-o-y to Q412. However, this was countered by declines in ARPU, with the market share weighted average declining by 7.1%.
- Meanwhile, evidence of SMS IP substitution is mounting - which could be a medium-term threat to ARPU. BMI calculates SszMSs sent per subscription per month has declined each quarter since Q411, reaching 109 in Q412, down 10.2% y-o-y.
- Switzerland remained in third position in the Western Europe Risk/Reward Ratings, as its industry rewards score continued to be one of the highest in the region.
Key Trends And Developments
- In Q113 there were two significant announcements for the development of the high capacity wireline broadband market. In February 2013 incumbent operator Swisscom selected equipment vendor Huawei Technologies to roll-out Fibre-To-The-Street (FTTS) networks in areas away from major urban centres. This is part of the operator's target to provide 80% of households in the country with high-speed broadband internet access by 2020. Meanwhile, several regional energy providers in Switzerland pooled their respective fibre-optic networks into an equally owned joint venture, Swiss Fibre Network AG (SFN). The companies aim to use their combined internal fibre networks to serve up to 1.4mn homes and businesses with high-speed broadband services by 2020. These developments will see high capacity coverage and competition extended in the medium term, benefiting consumers via better service quality and lower prices.
- Higher speed infrastructure investment has also been a key theme in the wireless market. After the launch of commercial LTE services in 26 locations by incumbent and mobile market leader Swisscom in November 2012, it reported that by April 2013 it had expanded its LTE network to cover 159 locations. Swisscom estimates the network covered 35% of the population in April 2013 and aid it has 300,000 subscribers using 4G enabled smartphones. Meanwhile, in February 2013 Orange Switzerland finalised a five-year deal with Nokia Siemens Networks (NSN). NSN will build Orange Switzerland's network to deliver LTE services and also expand its radio access network. Orange said it will launch its 4G services on June 1 2013 in about ten cities in Switzerland.