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Australia Telecoms Industry Report - 2020-2025

  • ID: 5304950
  • Report
  • March 2021
  • Region: Australia
  • 93 Pages
  • Idem Est Research

FEATURED COMPANIES

  • AGL
  • Fetch TV
  • NBN
  • Superloop
  • TPG
  • Vocus

This report provides analyses of revenue and market forecasts as well as statistics of the Australian telecoms industry including market sizing, 5-year forecasts, market insights, key telecom trends and also features the following:

  • Overall Telecommunications Market by Major Operators
  • Telco Operators Profile, Revenue and EBITDA Mix
  • Mobile and Broadband Subscribers & Revenue Market Overview and Forecasts
  • Spectrum Holdings
  • IoT Market Overview
  • Fixed Broadband Market: NBN, FTTP, HFC, FTTN and FTTC
  • National Broadband Network Detailed Market Overview and Forecasts
  • Thematics/Opportunities relating to 5G and NBN
  • Telco Infrastructure Review
  • Telco Transaction Database

The Australia Telecoms Market Industry Report, 2020-2025 includes an overview of the Australian market dynamics, market sizing, market forecasts, analysis, insights and key trends.

Australia Telecoms Industry Report at a Glance

Globally, the telecommunications sector is proving to be a core and essential infrastructure service to national economies, with data infrastructure becoming critical in a connected world and will likely increasingly attract a new class of investors such as large infrastructure funds. The author expects the Australian telecommunications industry to remain steady thanks to the defensiveness nature of the industry, amid the political uncertainties and an uncertain economic outlook due to the COVID-19 pandemic.

Australia has one of the most competitive and mature telecommunications markets in the world. The report forecasts that mobile subscriptions will continue to grow in the 2020-25 period while fixed broadband subscribers also expected to grow at a slightly lower average rate over the same period. The ratio of the telecommunications sector revenue to GDP is declining from a peak in 2000 to an all-time low in 2020.

The author forecasts the overall telecoms market is expected to decline until 2021 as NBN subscriber payments to Telstra will decrease gradually as all Telstra’s copper and HFC services are migrated onto the NBN and market growth will resume from 2022 onwards.

Telstra’s share of the telecommunications revenue pie has been declining over the last 5 years and its EBITDA share is declining even faster as Telstra’s dominance in the fixed-line market is challenged with the migration onto the NBN.

Capex Investments

The capital expenditure (Capex) from telecommunications operators is coming off from an all-time peak between 2017 to 2018 due to the NBN investments in upgrading Australia’s fixed broadband infrastructure. The publisher expects Capex investments to remain sustained to accommodate for data usage growth, mobile coverage expansion and capacity improvements. NBN expects an increasing Capex spend from 2021 to bring 75% of its fixed line footprint to 100Mbps speeds and above but excludes a clear plan to a gigabit speeds network upgrade to full-fibre. Instead, NBN will be required to continually invest in HFC and fixed wireless to increase capacity and accommodate more customers and higher data usage.

Mobile Subscribers and Revenue

The mobile subscriber market increased between 2014 and mid-2020 with Telstra and Optus growing their postpaid subscriber base and Telstra also increasing its MVNO and IoT subscribers significantly over the same period 2014-2020 period. This report estimates that Australian mobile subscribers will increase on the back of population growth and Internet of Things subscribers take-up.

Mobile network operators are facing competitive pressure with the market shifting to unlimited voice and text and data allowance as the sole offering differentiator. Operators are also bundling mobile plans with content offerings such as sport, music and video streaming.

Australia is now in the unfortunate position of being the only country in the developed world with a higher average mobile speed compared than fixed broadband as per Ookla speed tests.

The publisher expects 5G subscribers to represent 63% of all mobile subscribers by 2025.

Broadband Subscribers & the NBN

The report estimates the broadband subscribers growth will be sustained by household growth and a reduction of the number of underserved premises previously not able to connect now served by the Internet but now served by the NBN.

The NBN project remains a politically contentious issue for the country. The NBN has failed to address a flawed pricing structure, including a contentious usage charge, resulting in high pricing and is a wholesale failure to deliver affordable gigabit speed in comparison to countries such as New Zealand or Singapore who launched national broadband plans at a similar time. For the third year in a row, NBN also shifted its forecasted positive cash flow position to 2023 after increasing its forecast Capex spend.

By 2023, forecasts show that most subscribers migrated to NBN broadband services with a few remaining ADSL services in fixed wireless and satellites services and a number of fibre premises provided by greenfield operators and in-fill operators supplying wholesale services on the same terms as NBN. Opticomm, Uniti, Telstra with its legacy fibre Velocity estates and TPG are sharing the non-NBN market.

NBN Enterprise Products

The NBN enterprise product rollout strategy is creating a lot of industry debates. On one hand, the NBN embarked on a strategy targeting high ARPU enterprise customers while the industry is arguing that NBN’s push in overbuilding existing fibre infrastructure - in some instances joining 6 other fibre providers competing to offer services in the same Melbourne CDB building - is not in its remit and capital investments should be directed to upgrade underserved areas or residential services in FTTN or HFC areas with poor speeds.

On the other hand, the NBN product service is also opening up new opportunities in areas where enterprise fibre services were not present prior to the NBN investment. This, in turn, is creating opportunities for smaller specialist business ISPs to broaden their footprint and offerings and address the small and medium market segment that is largely overlooked by the large operators such as Telstra, Optus, TPG and Vocus.

Thematics - 5G/NBN/M&A

The arrival of 4G moved the Internet off our desktops into our palms and pockets, 5G could transform the network from something we carry around to something taking us around either virtually (augmented reality or virtual reality) or in reality (autonomous vehicles), the 5G outcome and benefits beyond fast connectivity remain largely unknown in terms of business models, investments required and timeline.

With 5G a reality now in Australia, telco operators can now do an arbitrage of NBN speeds in areas where the copper lines are very long or in poor health and thus offer a faster service over 5G than NBN at an equivalent price for some segments of the market and some geographies.

This report shows subdued growth due to ARPU pressure compounded by margin pressure in the fixed broadband market is pushing telcos to look for outside opportunities to increase scale. The author expects another wave of consolidation in Australia, similar to the 2010-2015 period, post-NBN rollout as margins get squeezed further. Smaller NBN resellers will struggle to compete and sell-out to larger operators. Some market players outside the telco market are seeking growth by exploring ways to increase their scope of products and services offerings. The report outlines examples of some newcomers branching out by reselling broadband access services as a churn reduction strategy and increase consumers’ share of wallet.

Investment funds are assigning high valuation multiples to telecommunications infrastructure assets such as mobile towers, data centres, submarine cable and fibre infrastructure. This report outlines some real market examples of how investors view and value these investments with real industry examples and EV/EBITDA comparatives and benchmarks.

The Australia Telecoms Industry Report transactions database analysis highlights a resurgence of activity in 2020 and the market’s appetite for larger deals with the Vodafone/TPG merger, Uniti/Opticomm tie-up and the upcoming sale of Optus towers drawing interests from infrastructure investors.

The report also outlines select telecommunications transactions over the last 5 years. The last four years saw a slew of tier 2 telcos players rolling up smaller players to increase regional presence and scope of offerings. This came after a period of large consolidation deals that happened between 2010 and 2016. So far in 2020, the Vodafone/TPG merger finally got approved, the Opticomm/Uniti tie-up creates a new telco infrastructure entity and the upcoming sale of Optus towers are putting a renewed focus on large transactions.

The last 3 years saw limited deal activity with most deals done by smaller telcos rolling up smaller players and increasing regional footprint and scale, while large consolidation deals happened between 2010 and 2016. More deals are likely to be on the cards over the next 3 years. 

Note: Product cover images may vary from those shown

FEATURED COMPANIES

  • AGL
  • Fetch TV
  • NBN
  • Superloop
  • TPG
  • Vocus

1 Key Statistics
1.1 Australia’s Population
1.2 Australia’s Economy
1.3 Australia’s GDP

2 COVID-19 Impact

3 Overall Telecommunications Market, 2014-2025
3.1 Market Overview
3.2 Australia’s Race to Lead in 5G and Beyond
3.3 Historical Telecommunications Market Revenue, 2014-2019
3.4 Overall Telecommunications Market Forecast, 2018-2025
3.5 Telecommunications Market Capital Expenditure, 2014-2025
3.5.1 Historical Telecommunications Capex Spend, 2014-2019
3.5.2 Capex to Revenue Country Benchmark
3.5.3 Capex to GDP Benchmark
3.5.4 Telecommunications Capex Spend Forecast, 2018-2025

4 Telecommunications Operators Profile
4.1 Telstra Profile
4.1.1 Telstra Revenue and EBITDA Mix
4.1.2 Telstra InfraCo
4.2 Optus Profile
4.2.1 Optus Revenue and EBITDA Mix
4.3 TPG TeLEcom Group Profile
4.3.1 TPG Telecom Group and EBITDA Mix
4.3.2 Historical TPG Revenue and EBITDA Mix
4.3.3 Vodafone Profile
4.3.4 Historical Vodafone Revenue and EBITDA Mix
4.4 Vocus Profile
4.4.1 Vocus Revenue and EBITDA Mix
4.5 Superloop
4.6 Uniti Profile
4.6.1 Uniti + Opticomm + Velocity
4.7 Other Players Profile
4.7.1 Aussie Broadband

5 Australia Mobile market
5.1 Australia Mobile Subscribers Historical and Forecast, 2014-2025
5.1.1 Australia Mobile Subscribers Historical, 2014-2020
5.1.2 Australia Mobile Subscribers Market Share, 2014-2020
5.1.3 Australia Smartphone Share, 2020
5.1.4 Australia Mobile Subscribers Forecast, 2018-2025
5.1.5 Australia Mobile Subscribers by Generation Forecast, 2018-2025
5.2 Australia Mobile Revenue Historical and Forecast, 2014-2025
5.2.1 Historical Australia Mobile Revenue, 2014-2020
5.2.2 Australia Mobile Revenue Forecast, 2018-2025
5.2.3 Mobile Subscribers ARPU, 2014-2020
5.3 Mobile Coverage
5.4 Spectrum Holdings
5.4.1 Spectrum Regulation
5.4.2 5G and Other Spectrum Auctions
5.4.3 Mobile Frequencies Portfolios Analysis
5.4.1 Spectrum Depth Benchmark by Country
5.5 Mobile Download Data and Pricing Trends
5.6 Mobile Speed Tests
5.6.1 Ookla Mobile Speed Tests
5.6.2 OpenSignal
5.7 Mobile Virtual Network Operators (MVNO)
5.8 Internet of Things (IoT)

6 Broadband Market
6.1 Fixed Broadband Subscribers Historical, 2014-2020
6.2 Fixed Download Data Trends
6.3 Fixed Broadband Subscribers Forecast, 2020-2025

7 Telecommunications Infrastructure Investments
7.1 The National Broadband Network
7.1.1 Overview of the National Broadband Network
7.1.2 NBN Scope
7.1.3 Legislative Framework for the NBN
7.1.4 Regulatory Framework
7.1.5 Wholesale Only & Uniform Pricing
7.1.6 NBN Industry Implications
7.1.7 NBN Implementation
7.1.8 NBN Financials - NBN Corporate Plan Review 2021-2024
7.1.9 NBN Build
7.1.10 NBN Speeds
7.1.11 NBN Speeds Mix Compared to New Zealand
7.1.12 $50bn Later and Australia is Still a Broadband Backwater
7.1.13 NBN Business Segment - Enterprise Product Threat and Opportunity
7.2 Submarine Cables
7.3 Mobile Tower Infrastructure Landscape
7.3.1 Getting Ready for 5G
7.3.2 Tower Density Benchmark
7.4 Telco Infrastructure Comparative

8 Thematics/Opportunities
8.1 Facing Off Growth Saturation
8.1.1 Going for Scale
8.2 Growing Scope - Cross-Industry
8.3 New Telecoms Operating Model
8.3.1 The Attraction of Infrastructure Multiples
8.4 5G Developments
8.4.1 5G Overview
8.4.2 5G - Relative Capex Investments and Frequency Range
8.4.3 5G OpenRAN
8.4.4 Beyond 5G
8.4.5 Fixed Broadband Networks Doing the Heavy Lifting

9 Telco Transaction Database

10 Methodology

11 Copyright Notice

List of Figures

Figure 1 - Telco sector revenue as % of GDP in Australia
Figure 2 -Revenue Profile Historical Mix (A$m), 2014 - 2020
Figure 3 -EBITDA Profile Historical Mix (A$m), 2014 - 2020
Figure 4 - Telecommunications Market Revenue, 2020
Figure 5 - Telecommunications Market EBITDA, 2020
Figure 6 - Telecommunications Revenue & EBITDA Share, 2020
Figure 7 - Total Telecoms Market Revenue and Growth Rate (A$bn), 2018-2025
Figure 8 - Capex to Revenue Benchmark, 2014-2020
Figure 9 - Capex to GDP Ratio Benchmark, 2014-2019
Figure 10 - Telecommunications Capital & Operational Expenditure Spend, 2000-2025
Figure 11 - Telstra Revenue Mix - 2014-20
Figure 12 -Telstra EBITDA Mix - 2020
Figure 13 - Telstra Historical Revenue Mix, 2014 - 2020 (A$m)
Figure 14 - Optus Revenue Mix - 2014-2020 (A$m)
Figure 15 - Optus Historical Revenue Mix, 2014 - 2020 (A$m)
Figure 16 - TPG Telecom Group Revenue Profile, 2019-2020
Figure 17 - TPG Telecom Group Revenue Mix - 2019-2020 (A$m)
Figure 18 - TPG Revenue Profile, 2014-2019
Figure 19 - Vodafone Revenue Profile, 2014-2019
Figure 20 - Australia Mobile Subscribers Share Comparison, 2014-2020
Figure 21 - Australia Mobile Subscriber Share Comparison, 2014-2020
Figure 22 - Mobile Net Adds (000’s) Comparison, 2015-2020
Figure 23 - Mobile Subscribers Forecast, 2018-2025
Figure 24 - Mobile Subscribers by Generation Forecast, 2018-2025
Figure 25 - Mobile Revenue Forecast, 2018-2025
Figure 26 - Mobile Subscribers ARPU (A$), 2014-2025
Figure 27 - Subscriptions per MHz of Spectrum, Select Asia-Pacific Countries, 2020
Figure 28 - Mobile Handsets Monthly Download Data, 2017-2019
Figure 29 - Data Pricing Trends in Asia-Pacific (US$ per GB per month), 2017-2019
Figure 30 - Ookla Mobile Speed Test Ranking Comparison
Figure 31 - MVNO Share of the Mobile Market, 2020
Figure 32 - MVNO Subscribers (k), 2014-2020
Figure 33 - Spectrum available and IoT Landscape in Australia
Figure 34 - Broadband Subscribers Share Comparison, 2014-2020
Figure 35 - Australia Net-Adds (000’s) by Operators, 2015-2020
Figure 36 - Fixed Broadband Monthly Download Data, 2008-2020
Figure 37 - Australia Broadband Subscribers Forecast, 2018-2025
Figure 38 - NBN Architecture Overview
Figure 39 - NBN Corporate Plan Financials, 2010-2024
Figure 40 - NBN Corporate Plans (CP) Cash Flow Projections Comparison
Figure 41 - NBN Subscribers
Figure 42 - Broadband Migration to NBN Nearly Completed
Figure 43 - NBN homes Passed by Technology Forecast (k)
Figure 44 - NBN Services by Speed
Figure 45 - UFB Services by SpeedFigure 46 - Ookla Speed Test Results (Mbps) - January 2021
Figure 47 - Estimated Tower Market Share, 2020
Figure 48 - Subscribers per Tower, 2020
Figure 49 - Telecoms Providers EV/EBITDA Ranges
Figure 50 - 5G Network Slices Structure
Figure 51 - Effect of Frequency on Range
Figure 52 - 5G Capacity and Coverage Layers
Figure 53 - Relative Capex Required for 5G Network Infrastructure Investment
Figure 54 - Telecom Infra Project - OpenRAN Vision
Figure 55 - Volume of Data Downloaded (Terabytes/month), 2010-2019
Figure 56 - Wireless-Only Homes, 2014-2019

List of Tables

Table 1 - Australia - Key Statistics
Table 2 - Telecommunications Market Revenue by Operators
Table 3 - Total Telecommunications Market Revenue, 2018-2025
Table 4 - Historical Telecommunications Capex Spend, 2014-2019
Table 5 - Historical Telstra Revenue, EBITDA & Capex, 2014-2020
Table 6 - Telstra InfraCo Asset Portfolio, 2018-2020
Table 7 - Optus Revenue and EBITDA Mix, 2014-2020
Table 8 - TPG Telecom Group Revenue and EBITDA Mix, 2019-2020
Table 9 - TPG Revenue and EBITDA Mix, 2014-2019
Table 10 - Vodafone Revenue and EBITDA Mix, 2014-2018
Table 11 - Vocus Revenue, EBITDA and Capex, 2014-2020
Table 12 - Superloop Revenue, EBITDA and Capex, 2017-2020
Table 13 - Uniti & Opticom Revenue, EBITDA and Capex, 2017-2020
Table 14 - Aussie Broadband Revenue, EBITDA and Capex, 2018-2020
Table 15 - Australia Historical Mobile Subscribers, 2014-2020
Table 16 - Australia Mobile Subscribers Forecast, 2018-2025
Table 17 - Historical Mobile Service Revenue, 2014-2020
Table 18 - Mobile Service Revenue Forecast, 2018-2025
Table 19 - Historical Mobile ARPU, 2014-2020
Table 20 - Mobile Coverage & Reach - 2020
Table 21 - Historical of Spectrum Auctions and Costs
Table 22 - Spectrum Holdings by Operators and by Bands (MHz)
Table 23 - Mobile Frequencies by Operators and by Band (MHz)
Table 24 - Examples of MVNOs and their Wholesale Providers
Table 25 - Historical Broadband Subscribers, 2014-2020
Table 26 - Historical Broadband EBITDA Margin, 2014-2020
Table 27 - Historical Broadband ARPU, 2014-2020
Table 28 - Australia Broadband Subscribers Forecast, 2020-2025
Table 29 - NBN Technology Mix
Table 30 - Telstra and Optus Estimated EBITDA Margin
Table 31 - Australia Business Broadband Segmentation, 2020
Table 32 - International Submarine Cable Systems with Landing Stations in Australia
Table 33 - Telstra, Optus, TPG and Vocus Telco Infrastructure Landscape
Table 34 - Uniti, Superloop, Axicom and NBN Telco Infrastructure Landscape
Table 35 - Technology Specifications (ADSL, FTTN, Fibre, 4G/LTE, 4G/LTE-A and 5G)
Table 36 - Volume of Data Downloaded Mix (Terabytes/month), 2010-2019
Table 37 - Telco Transaction Database, 2015-2020

Note: Product cover images may vary from those shown

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  • AGL
  • Aussie Broadband
  • Fetch TV
  • Foxtel
  • NBN
  • Optus
  • Superloop
  • Telstra
  • TPG
  • Uniti Group
  • Vodafone
  • Vocus
Note: Product cover images may vary from those shown

The publisher uses primary and secondary research as well as proprietary information sources to generate market analysis and forecasts for fixed and mobile services in terms of both subscribers and revenue. Interviews are conducted with key service providers in the region to determine current and potential market sizing as well as future service offerings. Information gathered through interviews is further cross-checked to validate the total market size.

The primary research is supplemented with a range of secondary source material, including related research, press releases, securities filings, media, Web-based materials, and trade publications.

Industry and population statistics are also leveraged for reference and to ensure consistency in the data collection. Extensive service provider primary and secondary research, together with the publisher's end-user research database, provides a strong basis for sizing and forecasting the market. The multiple reference points allow for validation of information provided by the service providers compared with that gathered from alternative sources.

Note: Forecasts are made in local currency, and no allowance is made for inflation. All numbers in this document may not be exact due to rounding.

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