Germany Q4 - Vodafone Falters As E-Plus Forges Ahead

As expected, German mobile customers topped the 80m mark with ease in the final quarter of 2006, ending the year at 81.6m after net additions of 2.24m in the three months. The increase in the number of mobile connections in the quarter took penetration from 96.3% to 99.0%, leaving the total gain for the year at 7.1pp.

The fourth quarter of the year is a traditionally strong quarter in the German market, and 2006 was no exception, with 38.4% of the year's net additions coming between September and December - marginally down on the 38.8% recorded in 2005. It should be noted here that it is our policy to use active customer numbers wherever possible in the calculation of market totals and related statistics. In Germany, both Vodafone and E-Plus release registered and active figures, whilst T-Mobile only discloses registered data and O2 only active customer numbers.

Using the registered totals, the market total stood at 85.6m at the end of 2006, which implies a penetration rate of just under 104%.

The market share positions of Germany's four operators moved closer in 2006 as the two smaller players both made progress at the expense of their larger rivals. The star turn was from KPN's E-Plus, where its much lauded branding and MVNO strategies won it 1.4pp of market share. For its part O2, which was level with E-Plus at the end of 2005 on 12.9%, made slower progress, but still eeked out an additional 0.6pp share over the year - worth a not insignificant 0.5m customers in absolute terms. Second placed operator Vodafone sustained the majority of the damage as a result of these gains, losing 1.5pp of share over the year (on an active basis) on the back of a year on year growth rate of just 3.1% in its active numbers. Some of this loss was down to an increase in the inactivity rate at Vodafone from 8.5% to 10.1% over the year - most probably as a result of prepaid churn to E-Plus and O2, which peaked in the third quarter. On a registered basis, Vodafone recorded customer growth of 5.0% during 2006.

However, results were also skewed by T-Mobile's move to include machine-to-machine SIMs in its stated customer base during 2006, inflating its own annual growth figures from 4.5% to 6.4%, and depressing the progress of its rivals relative to the overall market. Without the reclassification, Vodafone's market share loss would have been less than 1.3pp rather than 1.5pp, and T-Mobile's own slide would have amounted to around 0.9pp rather than 0.5pp. Both of the smaller players would also have made slightly better progress, of course, without the inflation in T-Mobile's numbers. That said, the effect of the reclassification is a one-off, and the machine-to-machine base only represents around 1.7% of T-Mobile's end-of-year total.

The cumulative growth rates of the four operators since Q4 2005 - including T-Mobile's shift in Q1 2006 - are shown in the chart below, using active customer numbers wherever possible.

This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World. To download a sample issue of the Briefing in PDF format, please click here. For more information including full subscription pricing, please visit The Mobile World"

Posted to the site on 13th March 2007