Australia’s largest operator, Telstra, was the only Australian operator to report year-on-year mobile service revenue growth in 2H12. At the other extreme, Vodafone’s mobile service revenues declined by 17.8%. In addition to its revenue growth, Telstra increased its ebitda market share and mobile margins.
Over the past year, Telstra gained market share in a number of key mobile market segments, including prepaid, postpaid, and mobile broadband. It also reduced its opex and lowered churn in 2H12. During this period, Telstra continued to increase its mobile capex as it expanded its LTE network reach to regional Australia.
Part of Telstra’s success is due to the weak performance of its rivals, Optus and Vodafone. Unfortunately for them, Ovum does not believe that their fortunes will change significantly in 2013. While Telstra’s mobile lead is largely due to its network supremacy, it is also ahead of its rivals in virtually every platform, from its digital strategy to marketing and brand perception.
Vodafone’s network woes play into Telstra’s hands
There are few markets in Asia-Pacific that have such a dominant leading player as Telstra in Australia. Telstra won the 3G network battle in Australia and is now investing to ensure its LTE network supremacy. High-ARPU customers (many of which have switched from Vodafone) are willing to pay a premium for Telstra’s faster, more extensive, and more reliable network.
As a result, Telstra’s mobile services revenue market share increased from 41.7% in 4Q10 (the start of Vodafone’s network problems) to 48.0% in 4Q12. The operator reported A$3.8 billion ($3.95 billion) in mobile service revenues in 2H12 and EBITDA of A$1.4 billion. While mobile broadband and M2M led this growth, Telstra also gained market share in the postpaid and prepaid segments in 2012.
On the other hand, Optus’s revenue and connection market share were flat between 4Q10 and 4Q12. Its 2H12 mobile service revenues fell by 4.6% year-on-year to A$2.5 billion, but its EBITDA increased by 9.2% to A$638 million.