Brussels – Etno, the Association representing Europe’s leading providers of digital communications and services, and Idate, the digital economy think-tank, have presented today their Annual Economic Report on European telecoms.
The report describes the state of the art for the sector and presents consolidated figures from 2015, as well as projections for 2016 and the coming years. The facts and figures presented in the report are highly relevant to the on-going policy debate on creating a European gigabit society.
CapEx grows as investment pressure mounts
In 2015, Capital Expenditure levels (CapEx) grew 4% with respect to 2014, bringing the total sector investment in EU28 to €47bn/year. Etno member companies lead such investment effort, representing over 70% of the sector investment in fixed networks – or 60% of the total, mobile and fixed. In Europe’s 5 key markets (Germany, Italy, Spain, France and Great Britain), Etno members and cable companies amount to 83% of the fixed investment.
CapEx growth is good news for the EU, as companies and policymakers push to upgrade Europe’s digital networks. However, there remains a significant investment challenge before the EU can achieve its 5G and gigabit society goals.
Revenues stabilize, but environment remains challenging
Good and stable revenues are vital to a sustainable investment environment. For this reason, it is positive to note how the industry bleeding seems to have stopped. Revenues growth perspectives, while far from booming, are expected to stabilize as from the end of 2016. EU28 service revenue growth should switch from negative to 0% in 2016, while turning slightly positive across the markets in which Etno companies operate (+0,2%).
However, the gap with the United States remains significant, with EU telcos being expected to score €221bn annual revenues in 2016, compared to €306bn in the US.
Mobile more and more important, fixed upgrades on schedule
The composition of telecom service revenues shows well how telecom markets are evolving. According to Idate, in 2016, mobile revenues will equal fixed revenues for the first time in the history of the sector (€63bn each). This is also reflected in the growth of mobile data traffic, which will reach 1.6 GB per user per month in 2016, and is expected to grow up to 7.4 GB per user per month by 2020 (downstream).
On the fixed side, Etno’s investment effort are reflected in the rise of superfast internet, with VDSL and fibre gaining more and more ground. In 2015, there were 20.4 million VDSL subscriptions (compared to 11.8 in 2014) and 19.4 million FTTH subscriptions (compared to 14.9 in 2014).
Internet of Things and M2M, towards a 5G world
As Europe gears up for launching 5G – the future technology integrating and fixed networks – encouraging data come from the Internet of Things (IoT) and Machine to Machine (M2M) world. According to Idate, utilities, electronics, automotive and wellness are important sectors that will drive the IoT revolution. By 2025, Idate expects more than 1.8 billion units to be connected, with utilities alone contributing 470 million units. Similarly, M2M will contribute with 3.6% of the total mobile revenues by 2020.
