MobileWorld's Global Q2 2006 Operator Review
Published on: 25th Oct 2006
Note -- this news article is more than a year old.
The list of the largest single nation operators is almost the same as it was this time last year. Because the Indian mobile market is still fragmented no one operator has managed to enter the top ten as the market as a whole did in the league table of markets.
Thus it comes as no surprise to see that the two Chinese giants top the list. Cingular Wireless is in third place, just ahead of Verizon Wireless, which has moved into fourth, at NTT DoCoMo's expense. The Japanese leader has dropped just one place though. Sprint Nextel retains sixth, while MTS and Vimpelcom of Russia are still in seventh and eighth places, respectively. Mexico's Telcel (Radiomovil) is ninth, as it was last year, but there is a new tenth. Last year, this spot was occupied by Brasicel - Vivo Participacoes - but its problems with inactives have lead to it dropping five places, to 15th, to be replaced in the top ten by T-Mobile Deutschland which just keeps Vodafone Germany out of the list.
The chart below shows the current world order, with the market being absolutely dominated by the two Chinese companies. This time last year, the two were larger than the remaining eight companies put together and so they are again... by almost exactly the same margin, 7.23%, rather than 7.27%. For the non-Chinese operators, that probably counts as some kind of progress...
This statistic of course implies that China Mobile and China Unicom will also top the list of fastest growing businesses and indeed, they do. China Mobile added 48.6m customers over the past twelve months or almost 10% of the world total. This is more than the next three companies put together. China Unicom added 14.6m, which amounts to a marginal loss of market share. The rest of the table is rather different though. MTS of Russia comes third, with just under 14m adds, while its rival Vimpelcom is fourth, with 13m. It too lost share to the market leader during this year.
The Indian subcontinent dominates the bottom half of the table. Bharti, the company in which both Singapore Telecom and Vodafone have significant minority stakes, came fifth with 10.8m net adds, 900k more than the second fastest growing Indian business, Reliance Infocomm, the CDMA operator. Pakistan Mobile's total of 9.7m is enough to separate Reliance from the next Indian business, Hutchison India, which added 9.1m. Ninth place is taken by America Movil's Colombian business, Comcel, while tenth is taken by another Indian company, the state-owned BSNL. These two added 8.8m and 8.0m customers respectively.
The first Western operator on the list is Verizon Wireless in 13th, just ahead of Sprint Nextel, these two having added 7.4m and 7.3m respectively. The first European operator is in 16th - Kyivstar of the Ukraine - which had marginally the better of its battle for market share with Ukrainian Mobile (6.7m and 5.6m respectively). The first Western European operator is in 28th place and is TIM of Italy, the business which may (or may not) be for sale. This added 4.3m customers, which, given the highly penetrated market in which it operates is some achievement. In total, five companies grew by 10m or more, a further 16 by between 5m and 10m and another 40 or so, by between 2.5m and 5.0m.
So far, we have looked exclusively at single market operators for the purposes of this review. However, if we include multinationals a very different picture emerges. There are several ways that one can measure size with businesses such as these and we have chosen on this occasion to shows three separate league tables. The first shows each company's "total reach" - the entire combined base of all the businesses in which it has an investment. For ease of comparison, we have shown all the tables on a proforma basis; that is to say, the figures shown assume that the entities were always constituted in the same way they are today.
The first company on the list provides the most marked example of this in practice - Vodafone Group. If all of its investments are included, it has very nearly 550m customers. That half of these are attributable to China Mobile, a company in which it only has a 3.27% stake, is irrelevant - what this measure shows us is the potential influence that a business can have. Arguably, of course, Vodafone's influence could be even greater than this 20%+ global market share implies, as this figure does not include any of the customers of the partner networks where Vodafone has co-branding arrangements. The largest of these, America Movil, also features on this same list, at number five with a further hundred million customers.
Vodafone's Chinese partner is second on the list in its own right, while its national competitor, China Unicom, is third. Telefonica's acquisition of the O2 Group has pushed it into fourth place ahead of America Movil, its great Latin American rival, and also ahead of its European counterparts, Deutsche Telekom and France Telecom. All of these seven have reached the 100m+ customer mark, at least on this basis of calculation.
The last three companies in the table may surprise some readers.
Telenor has been quietly expanding into markets which were until recently quite unfashionable and this strategy has paid off spectacularly. It is one of only two companies to have achieved a double digit quarterly compound growth rate and has, since the end of the quarter joined the 100m club. Neither of the next two in the table is that far behind. Singapore Telecom is ninth, largely as a result of its policy of regional expansion. It has significant investments in India and Indonesia and these are the principal driving forces behind its growth. Finally, we have Orascom. This, admittedly, is a rather loose definition and perhaps a better name would be the Sawiris family, the controlling shareholders of Orascom. Suffice to say that this total includes all of Orascom Telecom's customers, all of WIND's in Italy and all of the customers of the various Hutchison businesses, in which Orascom now has an equity interest. Although these companies are, at the moment, only rather loosely bound together, that could change and if it does, a new superpower would emerge.
The second of these tables compares the leading consolidated customer bases. Nine of the names are the same, though the order differs. What we show here are the customers of the businesses that would normally be included in a formal financial consolidation. Thus, for instance, Vodafone loses both its Chinese and Indian numbers and as a consequence, drops to number two on the list. Equally, Telefonica loses the subscribers it had through its association with Portugal Telecom - not just in Portugal, but also in PT's international markets in Africa and the Asia Pacific region. Deutsche Telekom, France Telecom, America Movil, Telenor and Singapore Telecom are unaffected, but the Orascom federation falls away, to be replaced by TeliaSonera, which has manly relied on its Turkcell and MegaFon associates to get into tenth place. Six other companies have a 50m+ presence on this basis and deserve a mention. They are, in descending order, MTS of Russia, Telecom Italia, Cingular Wireless, Verizon Wireless and Sprint Nextel from the USA and finally, Vimpelcom.
The final table again contains many of the same organisations, as one might expect, but this time, the measure is controlled customers. This is really the gold standard of the industry, as undoubtedly alliances can be dissolved and investments sold.
From our perspective, this is the most interesting of the three tables as it shows us something that perhaps we might not have expected. That is, although Vodafone has been heavily criticised this year by the financial community for not being invested in growth markets or not managing to take market share in its mature markets, it has, in fact, considerably outperformed its European peers, including, by some measures, Telefonica.
One year ago, Vodafone had 54m more controlled customers than Telefonica and Deutsche Telekom. It had 68m more than France Telecom. Today, its lead over Telefonica is 61m, while the gap between it and Deutsche Telekom has widened by a further 12m customers to 66m. It now outpaces France Telecom by 83m, or comfortably more than 100%.
The Mobile World takes the view that the mobile market is still far from mature and that there is significant growth to be enjoyed, even in Western Europe. But there will come a time when the market is mature. At this stage, the managers of these companies will have to ask themselves, whether it is better to have a portfolio of businesses in rich, low growth markets, or a similar portfolio in poor, low growth countries. The answer would seem obvious... but in the meantime, the trick is to have one foot in each camp to get the benefits of high profitability and high growth. Not many of the businesses on this list have managed this as well as they might.
Those amongst our readers who are curious to know how these tables develop, below the top ten, are recommended to subscribe to The Mobile World Database, where this information and much else besides can be found. However, being of a generous nature, we will share with our non-subscribing readers the knowledge that at 30th June 2006, there were another three companies on this list with more than 50m controlled customers - Telecom Italia, Sprint Nextel and Vimpelcom.
This article was extracted from The Mobile World Briefing. To download a full version of the Briefing in PDF format, please click here."