Author(s): Kester Mann
Growth of business mobile subscriptions is set to exceed that of the consumer segment in the five leading European markets of France, Germany, Italy, Spain and the UK, reveals CCS Insight's latest forecast, published in late December 2017.
During the period from the end of 2016 to the end of 2021, Germany and France are projected to lead the way with a compound annual growth rate (CAGR) of 2.8 percent and 2.6 percent, respectively. This compares with just 0.1 percent and 1.4 percent for consumer subscriptions. Spain (1.1 percent) and Italy (0.7 percent) will also enjoy a positive CAGR.
France has the lowest penetration of business subscriptions, according to the report, at just 13.4 percent in the fourth quarter of 2017, but we expect this to rise steadily to 14.0 percent by the end of 2021. This follows a positive 2017, during which the market total rose an impressive 3 percent in the 12 months to September.
Of the five key European markets covered, we estimate that Germany enjoyed the highest growth rate of business mobile subscriptions in 2017, at 3.8 percent. We expect steady momentum to continue as the market hits 17.2 percent penetration at the end of the forecast period.
Spain has the highest proportion of business customers, at 21.1 percent at the end of 2017. A principal reason is the large share of small office and home office companies in Spain, defined as businesses with up to 10 employees. This segment accounts for more than one in three business subscriptions, at 3.8 million at the end of 2017. As macroeconomic conditions improve, we project that business customers will represent 21.5 percent of all mobile subscriptions in 2021, or 11.4 million.
Business mobile subscriptions in Spain by type
Source: CCS Insight Market Forecast: Business Mobile Subscriptions, EU5, 2017-2021
However, the UK is set to buck this trend. We estimate that business subscriptions will remain static at 16.1 million between now and the end of 2021, owing to uncertainty over Brexit and the likelihood that companies will adopt cautious spending strategies as the UK continues the process of withdrawing from the EU.
The share of business subscriptions in the UK is also one of the highest among the major European markets at 18.9 percent, offering more-limited growth potential. Combined with incremental growth anticipated in the competitive consumer market, CCS Insight projects that business subscriptions will fall to 18.6 percent in 2021 — the only market within the forecast to show a trend of decline.
Italy stands out for the unusually high number of prepaid customers within the business segment, at 23 percent. We expect steady growth during the period to 2021, although this could accelerate should fourth operator Iliad seek to bring market disruption beyond the consumer segment after its anticipated launch in the second quarter of 2018.
Note that a business subscription is defined by CCS Insight as a cellular subscription billed to a company of any size, including government institutions. It excludes consumers using personal phones and subscriptions for work (as part of a bring-your-own-device practice). Cellular subscriptions exclude machine-to-machine connections.
CCS Insight's business mobile subscriptions forecast splits the market into small companies (of up to 10 employees) and enterprises (more than 10 employees). We also estimate the number of small business users on consumer tariffs, and provide an overall split into prepaid and contract. The full report is available to our customers here. For more information, please click here.