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European cellular market approaches saturation levels (Market News)

As cellular markets in Western Europe approach saturation, 2002 will represent the last year of double-digit revenue growth. According to a new report by Strategy Analytics, cellular service revenues in the region will increase 20% to reach US$90 billion at the end of the year, followed by a slowdown as subscriber growth rates reduce dramatically. However, prospects for service revenue growth have been saved by indications that the average revenue per user (ARPU) is reaching the bottom of the curve. "Average revenues have fallen by one-third over the last three years to reach US$370 per subscriber," said Phil Kendall, director of the Strategy Analytics Global Wireless Practice. "If that trend had continued, prospects for the region would be particularly bleak. But with average voice expenditure levels stabilizing in many markets, and data expenditure continuing to grow strongly, ARPUs will creep up slowly after 2002." Prospects for the handset market, however, are not as smooth. "Having increased by 46% in 2000, handset sales will contract by 13% in 2001 with only 120 million handsets sold," said Kendall. "Subscriber growth has had little chance of reaching the 72 million net additions recorded in 2000, and the replacement market is failing to fill this gap." Operators cutting prepaid subsidy levels, and delays in the introduction of GPRS (data) handsets and services, have all played a part in the decline, according to David Kerr, vice-president of the company s Global Wireless Practice. "The good news is that the handset market should rebound quickly as users make their delayed replacement purchases in 2002," said Kerr. "Western European Cellular Market Forecast (20012006)" is available from Strategy Analytics for further information see www.strategyanalytics.com. A related report (Worldwide Cellular Forecast Update 20012006) predicts that despite the European contraction, the worldwide sales for handsets will grow by 8% to reach 440 million units in 2001. Growth will return to double digits in subsequent years, rebounding to 20% annual growth. Global handset sales will pass the 1 billion mark in 2006, with GSM systems continuing to dominate, accounting for 70% of sales.
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