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- Signs of hope as mobile operators’ falling average revenue per user (ARPU) starts to level out

- Industry counting on new multimedia messaging and Java-based services to reverse the long-term trend by lifting ARPU

- Operators will also need to embrace wireless LAN services if they are to maximise future revenue streams

CAMBRIDGE, UK, October 10, 2002 Subscriber numbers in Western Europe’s mobile telephone market will stagnate at around the 300 million mark for the foreseeable future, according to a new report released this week by Analysys, the global advisers on telecoms and new media ( However, there are some positive signs for mobile operators, with the long-term decline in average revenue per user (ARPU) starting to level out.

The report, Western European Mobile Forecasts and Analysis 20022007, forecasts mobile subscriber growth of 6% for this year, down significantly from the 17% growth achieved last year and the 53% growth of 2000. (Chart Mobile subscriber numbers in Western Europe by technology generation,
20022007 is available to journalists on request.)

“The industry has had a very slow year so far, with Western European subscriber numbers growing less than 3% in the first six months of 2002, and barely increasing at all in some countries, such as Germany,” comments Katrina Bond, lead author of the report. “Most people in Western Europe who
want a mobile phone already have one, but operators are starting to see some success in improving the amount of revenue they get from each customer.”

Analysys forecasts that Germany, Italy, Sweden and the UK will all maintain their 2001 ARPU levels this year.

E-Plus in Germany was among the operators showing the greatest improvement in ARPU during this year, while O2 Germany, O2 UK, Orange UK, T-Mobile UK, Telia in Sweden and Telecom Italia Mobile also showed signs that they were on the verge of reversing the long-term decline in ARPU.

This potential turn-around has been helped to a large degree by marked growth in the percentage of revenue that operators are obtaining from non-voice services. Analysys forecasts that Western European operators will earn 13% of their revenue from non-voice services this year, compared to
8.8% in 2001 and 5.3% in 2000. “This is a positive trend, but for it to continue operators must succeed with the new messaging and entertainment services that are being introduced now,” warns Bond.

Over the past five months, several European operators have launched picture messaging services, also known as multimedia messaging services (MMS), and handset manufacturers Sony Ericsson and Nokia have launched a camera attachment and camera phone, respectively, to enable people to use picture messaging for photo messaging. Also, operators have started promoting highly
graphical, downloadable games for mobile phones using Java technology and colour-screen handsets.

“These are the types of service that operators need to capture the imagination of consumers and to drive mobile network traffic and revenue,” says Bond. “But the industry’s record with new mobile services has been tainted in recent years and the stakes are high.”

Operators cannot afford to repeat the mistakes they made with WAP and their slow start with GPRS. Both of these were hindered by a lack of complete service packages which must include not just the basic technology, but also attractive devices, reliable networks, appropriate pricing, strong
marketing, and, of course, easy-to-use services that are either fun or highly productive. Success will see a continued recovery in ARPU and less reliance on voice revenue alone.

The report also points out that mobile operators must embrace public wireless LAN services if they are to maximise future revenue streams. Between 3% and 10% of mobile non-voice revenues could be lost by operators if they choose to ignore public wireless LAN access opportunities.

The report analyses key trends in the Western European mobile market as well as examining the progress made with GPRS and UMTS, and the potential threat of public WLAN services. It provides detailed market forecasts for Western Europe as a whole, and individually for France, Germany, Italy, Sweden and the UK. Available in pdf and PowerPoint/Excel formats, pricing starts from
EUR1445. For more information, telephone Analysys on +44(0)1223460600 or

About Analysys

Analysys, the global advisers in telecoms, IT and new media, works at the forefront of the communications revolution, delivering advice and insight to established and new entrant players. From offices in Cambridge, London, Glasgow, Madrid, Milan, Paris, San Francisco and Washington DC,
Analysys staff provide strategy and systems consultancy, information services and start-up support to the companies that are creating the networked economy. Analysys Research reports and market intelligence services provide authoritative coverage of this convergent industry, based
on an unrivalled ability to fuse real-world experience, rigorous research and forward-looking analysis.

Media contacts (for author photography, executive summaries and interviews)

Natalie Dargan

Analysys Research

Tel: +44 (0)1223 460600


Martin Brooke

Martin Brooke Associates

Tel: +44 (0)1223 264050


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