Mobile Voice in Western Europe: Back to Basics for Growth Strategy
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Western European mobile voice revenues have been stagnating due to saturating markets and price declines. By the end of 2006, mobile voice revenues were growing at just 1% year-on-year compared with 7% two years earlier. Many operators have reacted by aggressively promoting advanced mobile data services, however consumers have responded mutedly and any data growth has failed to offset the decline in voice revenue growth. Voice accounts for over three quarters of mobile operator revenues in Western Europe, and as such operators will need to develop focused voice strategies in order to stimulate overall revenue growth.
We believe there is still further scope to grow voice revenues as European usage lags many other developed economies and a number of early success stories suggest that pricing can be successfully used to boost usage levels.
We recommend that European mobile operators reinvigorate voice usage with simplified, flat-rate and large-minute bundle pricing plans. Players should also consider launching tariff plans targeted at specific user-groups with different voice consumption patterns. Operators should be careful to assess the profitability impact of these initiatives though, and where necessary take mitigating steps to counter the potential margin impact. Judicious pricing of text messaging services such as SMS, IM and email is essential, as availability of such services at very low prices can cannibalize voice usage.
Finally, it will be important for players to capitalize on voice growth opportunities offered by prevailing market conditions in different geographies. In markets with a very high percentage of pre-paid customers, encouraging contracts can help operators to grow consumer spend and usage of voice. Similarly markets with very high mobility premiums offer an opportunity to accelerate fixed-mobile substitution through specialized tariff plans.
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