This quarter, BMI has extended its forecasts for Ireland's fixed-line voice, broadband and mobile communications markets through to 2018. We have also utilised the latest operator and regulator data to fine-tune those forecasts. As such, we expect to see slightly stronger mobile subscription growth and slower contraction of the fixed-line market. We hold to our current outlook for modest growth in the broadband market on the back of eircom's progress with its next-generation access network, the rollout of 4G LTE services and potential consolidation in the mobile market, as well as the entrance of Electricity Services Board (ESB) into the mass market broadband services arena. That said, we expect price competition to intensify across all sectors, including pay-TV, following eircom's launch of eVision-branded IPTV in Q413.
- At the end of September 2013 there were 5.615mn mobile subscriptions in Ireland, including mobile broadband and M2M subscriptions. Total mobile subscriptions decreased by 3.2% this quarter while mobile broadband subscriptions declined by 1.8%.
- Based on the underperformance of Ireland's mobile operators in 9M13 we expect market wide ARPUs to drop to EUR25.6 by the end of 2013, and to EUR23.7 in 2014, but forecast they will recover slightly over the long term, as increased 3G and 4G penetration rises towards the end of our forecast period to 2018.
Key Trends & Developments
In January 2014, Electricity Supply Board (ESB) received regulatory approval to build and operate a fibreoptic next generation access network capable of delivering high-speed broadband services to more than 500,000 homes and offices across rural Ireland. While BMI welcomes any initiatives aimed at extending broadband access to Ireland's underserved rural communities, and argue that ESB is better placed than most telecoms operators to do that, we believe the partially state-owned utility will struggle to generate a return on its EUR400mn investment.
ESB will roll out a fibre-to-the-building (FTTB) network that will directly connect 500,000 premises via electricity cable pylons, poles and conduits in areas that incumbent eircom and alternative operators such as Vodafone have bypassed owing to the unprofitability of extending high-cost infrastructure into sparselypopulated and low-income areas. By doing so, it will complement efforts by eircom and UPC in deploying combinations of fibre-to-the-home and fibre-to-the-node (FTTH/FTTN) technologies to larger towns and cities in the Irish countryside.
ESB will likely focus mostly on infrastructure and generate revenue through monthly retail access fees as well as wholesale access agreements with third party operators, service providers and content vendors. Although data transfer speeds of up to 150Mbps represent a significant improvement over existing Internet speeds in rural Ireland, it is unclear whether its retail rates will be sufficient to cover the projected investment. BMI does not foresee ESB becoming an active participant in the value-added services content market; consequently, revenue streams will be relatively limited.