LUTON, England-Cellular penetration in western Europe is expected to surpass 70 percent within five years, according to a new report by Strategy Analytics titled “Mobile Communications Service-Europe.”
Annual service revenues could grow to more than $150 billion during that time. However, average revenue per user will continue to fall from $54 per month last year to $46 in 2004, said the report.
“ARPU in western Europe has fallen from $71 per month to $54 between 1996 and 1998, and this despite the fact that penetration was still at a relatively immature 24 percent at the end of last year,” said Declan Lonergan, director of wireless services in Europe for Strategy Analytics. “We will see a growing contribution to ARPU from non-voice services over the next few years. However, over the coming five years the net result of penetration growth and data revenues will still be a drop in ARPU.
“The good news, however, is that this may well represent the bottom of the ARPU curve, and operators can look forward to a growth trend in the longer term.”
Handset sales in the region are expected to grow to 183 million units per year during the next five years, from 61 million units last year.
Lonergan said the aggressive forecast for cellular growth in Europe is based on several fundamental assumptions, all of which the company expects will occur.
“Firstly we envisage further scope for price reductions, particularly at the lower end of the market where prepaid services dominate,” he said. “Secondly, we are expecting to see significant displacement of landline traffic to cellular as more and more of the traditional barriers to substitution are removed.
“And finally, impacting on our cellular handset sales forecast, we envisage frequent phone replacement and upgrade habits to develop, resulting from users’ requirements for more sophisticated products, combined with some technology discontinuities, such as the introduction of HSCSD and GPRS, which will also stimulate sales activity.”
