Switzerland's high income status and demand from local consumers for the latest technologies has made it one of the highest value per capita telecoms markets in Western Europe and globally. This has driven investment by operators in infrastructure, with the incumbent Swisscom investing in fibre, while it also launched LTE in 2012. Similarly, its competitors have been investing in LTE, with all three mobile network operators offering commercial services since June 2013. The outlook is relatively bright for the wireless and wireline markets, despite the squeeze from market saturation and threats to traditional revenues from IP alternatives. One downside is that in the mobile market ARPU declined sharply, as price competition has intensified in a market with already high penetration.
- Our forecasts for the mobile, fixed-line and broadband markets in Switzerland were extended to 2018 in the Q2 2014 update.
- In Q313 the integration of Lebara Mobile subscriptions by Sunrise resulted in a boost to its market share, which rose 2.8pps q-o-q to 23.7%.
- The OECD released data for dedicated mobile subscription penetration at the end of 2012, showing growth was slightly below our forecast. We believe this is likely the result of customers deferring subscriptions as they wait for LTE services to become more widely available.
Key Trends And Developments
Switzerland's LTE market has developed rapidly, with all three operators investing heavily to rollout infrastructure. Swisscom was the first operator to launch commercial services in November 2012, and Orange and Sunrise launched services in June 2013 as they looked to minimise the incumbent's first mover advantage. Another challenge is for Swisscom's rivals is the scale of supporting infrastructure at the incumbent's disposal. However Orange has taken measures to minimise this disadvantage, signing an agreement for backhaul capacity for 1,000 4G LTE sites from leading cable operator UPC Cablecom. BMI believes the deal will remove a bottleneck for Orange in terms of service capacity and quality, enabling it to offer strong competition to the market leader.
Meanwhile, the wireline broadband market is also evolving rapidly with investments in high-speed technologies. The incumbent operator Swisscom announced in September 2013 that it plans to upgrade its fixed broadband infrastructure to make high-speed services available to 2.3mn households and businesses by 2015, with download speeds of up to 1Gbps available to 700,000 customers by the end of 2013. Swisscom plans to use a combination of fibre deployment models, as well as VDSL, as a means of expanding services across different parts of the country. By 2020 it expects 80% of households and businesses to have access to 100Mbps broadband.