Ovum has examined the performance of the incumbents in mature markets (TM, Telstra, Telecom New Zealand, PCCW, KT, Chunghwa Telecom, NTT and SingTel) and the news was good. Revenues for the majority of incumbents improved, helped by mobile and broadband growth and decelerating fixed revenue losses.
In most markets, total revenue growth improved compared to 2009. The exceptions were SingTel and Telstra because of increased competition and aggressive price cutting in their fixed broadband businesses. But four operators - PCCW, TM, Chunghwa and NTT - reversed 2009 revenue declines to post increases, thanks mainly to mobile data growth and the proliferation of smartphones.
Perhaps the stand-out performer is KT, which recorded revenue growth of 6.7% in 2010 compared with just 0.1% growth in 2009 - with growth helped substantially by its exclusive distribution of the iPhone in South Korea. In Japan NTT has improved significantly in 2010, with the company recording its first positive revenue growth since 2006.
PCCW is also worthy of mention, recording revenue growth of 2.9% ilast year, up from -5.2% in 2009. Despite the highly competitive local fixed and mobile broadband markets, it successfully attracted high-ARPU fixed and mobile broadband subscribers by offering high-quality services and has avoided price discounting.
Fixed voice revenue continued to be affected by substitution to mobile and VoIP. But the increased take-up of bundles, some of which include generous local, long distance and international call volumes, has slowed the decline. All operators in the study continued to report declines in 2010, but the declines were either slower or unchanged from 2009 for all operators but KT, due to the prevalence of fixed VoIP in Korea.
Much of the fixed segment revenue improvement was due to the growing impact of successful fixed bundling strategies. Bundled services and the growing popularity of operator home gateways have slowed the decline in fixed connections. For example, Telstra's fixed voice improvement is partly attributable to its home gateway devices. On the flip side, the migration to flat-rate plans and large bundles has resulted in lower ARPU for operators.
Fixed broadband revenue growth was varied. Operators that competed aggressively saw revenue growth eroded, but in more stable markets we saw growing IPTV and fiber broadband revenues as incumbents successfully up-sold to their increasingly loyal bundled customers.