Australians appetite for cheaper mobile plans is growing, and that’s good news for the country’s MVNOs, according to a new study by analyst firm Telsyte – and it may also be good news for TPG’s mobile ambitions.
Overall the Australian mobile services market grew by 444,000 new SIOs (services in operation) in the first half of 2017 to 33.7 million connections, according Telsyte’s Australian Mobile Services Market Study FY2017. Of those new SIOs, over 200,000 were from MVNOs, which collectively beat the individual performance of Optus, Vodafone and Telstra (in that order).
The top performing MVNOs for H1 2017 were ALDImobile, amaysim and Kogan Mobile. The Top 4 MVNOs were amaysim, TPG, ALDImobile and Vocus.
Network performance has been the most important factor when the average consumer chooses a mobile services provider since 2012 – until now. The current findings show that price or value has overtaken network performance as the most important factor for consumers.
“We are entering an increasingly price-competitive mobile services market in this pre-5G period,” said Telsyte senior analyst Alvin Lee.
Over half of handset plans are non-contract plans. This trend has been steady for many years, but the research shows that only 15% of consumers that have gone off contract plans have gone back to them in the last five years.
Despite this, re-contracting of premium priced handsets such as the iPhone X and the Samsung Note 8 are likely to help cellcos fight back in the second half of 2017. Telsyte estimates up to 65% of iPhone sales in H2 2017 will be via mobile contracts, compared to around 50% in previous iPhone “S” model years.
Ready for TPG
Telsyte analysis of the potential impact of TPG’s announcement that it plans to roll out a fourth Australian mobile network indicates that consumer are generally receptive to a new competitor in the market.
Research indicates 2 in 5 Australians (16 years and over) would consider moving to the new TPG network when it is ready – provided that TPG offers clear benefits such as free trial periods, unlimited data or significant bundling discounts.
“The challenge for TPG will be to profitably bring new services to market without simply attracting bargain hunters” Lee says.
TPG mobile base has been under pressure, despite the addition of iiNet customers. While the new network is expected to have an impact, Telsyte believes it will be difficult for the carrier to reach 1 million SIOs within two years of launching its network.
TPG and other carriers will need to broaden their focus beyond handsets to grow SIOs in coming years. The growth of handset services is expected to only follow population growth, with wearables, M2M and eSIM capable 2-in-1s presenting the best opportunities for carriers in the next two to three years.