Mobile networks under threat
By Dan Roberts, Telecoms Correspondent, in London
Published: January 4 2001 21:09GMT | Last Updated: January 4 2001 22:35GMT
Mobile phone ownership is reaching a saturation point, which will force many new networks out of business, according
to a study based on interviews with leading European operators.
Market penetration in most countries has passed 50 per cent of the population, and latest figures out on Thursday from
Vodafone and France Telecom suggest two-thirds of the UK population own a mobile.
However, Christmas sales data coincide with a new analysis from Forrester Research, an independent consultancy used
by phone manufacturers, which suggests that the good times may be nearly over.
It predicts that European penetration rates will peak at around 76 per cent at the same time as the auction of third
generation licences introduces several new operators.
The combination of fresh price competition and the increased cost of 3G networks is likely to turn average operating
profits of E172 ($163) per subscriber into a loss by 2007, warns Forrester.
This in turn will drive new entrants out of business and force Europe's remaining operators to consolidate into five large
groups.
The conclusions were rejected on Thursday by operators, which believe revenues from new internet services will
compensate to a greater extent than Forrester's projections.
Colin Tucker, managing director of Hutchison 3G, the UK's new entrant, also said it was misleading to draw
conclusions about new entrants based on the experience of existing operators.
Nevertheless, the research is likely to be scrutinised at a time when many investors are questioning the independence of
alternative analysis produced by investment banks employed by mobile operators on a series of forthcoming offerings.
The fourth-quarter subscriber figures show that phones were among the most popular Christmas presents this year.
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