Boston, MA -- (ReleaseWire) -- 04/10/2014 -- Consolidation is driving the German telecommunications market as operators strive to reinvent themselves as full converged service providers. O2 hopes to acquire E-Plus, Vodafone has gained control of Kabel Deutschland Group, and cable and broadband operators are exchanging assets that will bolster their presence in key cities. Low value voice and messaging services are being superseded by data-centric services as more consumers demand 'everything everywhere' access. Consequently, business strategies are being reforged and investment budgets geared as much towards the development of differentiated services as next-generation infrastructure. The shift of one MVNO from low-value prepaid to high-value postpaid plans conveys the story set to play out over the next five years. BMI believes the German competitive landscape is changing quickly and that many of today's players will not stay the course.
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- Mobile subscription growth forecast to rise from 115.1mn in 2013 to 118.5mn by the end of 2018, despite continued net losses at Vodafone. Market is buoyed by robust MVNO expansion and customer migration to 4G (LTE).
- Improved mobile subscriber mix and the loss of non revenue-generating inactive subscriptions at Vodafone (and likely also at O2 once it acquires E-Plus) should lead to a small improvement in the rate of ARPU erosion. However, the trend remains downward overall. BMI forecasts industry average ARPUs to fall from EUR13.9 in 2013 to EUR13.3 in 2018.
At the time of writing, the European Commission (EC) was still reviewing the EUR8.6bn (US$11.6bn) acquisition of E-Plus by Telefonica Deutschland/O2. The pro-merger German government has offered to conduct the review internally, but the more sceptical EC has insisted on assessing the proposal itself. The EC has already informed O2 that certain remedial actions would be required in order for the deal to go through: at the time of writing, the specific details were not known, but it seemed likely that reseller and MVNO businesses would have to be sold, possibly alongside assets such as spectrum and towers. The review is not expected to conclude until May 2014.
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