UK Mobile Telecommunications Market Insight

The United Kingdom mobile telecommunications market represents one of the most attractive telecommunications markets in the world, with the mobile telecommunications services (MTS) market sector generating approximately £21 billion of revenue per year. Annual growth in the mobile telecommunications services market is expected to total £900 million per annum.

The five leading mobile telecommunications services providers in the UK include Vodafone, O2, Orange (Orange and T-Mobile merged) and 3. The two leading mobile virtual network operators include Virgin Mobile and Tesco Mobile.

The widespread adoption of HSPA upgrades to 3G networks has resulted in rapid growth in the mobile Internet market sector. The United Kingdom now has 21% 3G penetration and mobile broadband is used as frequently as WiF hotspots for Internet usage.

In Q1 2008, over 26% of UK 25 to 34 year olds and 25% of 45 to 54 year olds were reported as using mobile broadband more than once each day. From February 2008 the use of dongles and 3G cards through laptops and PC connections increased by 500,000 over a five-month period. Despite the growth in mobile broadband usage, the most used communication method is SMS texting, with 44% of adults in the United Kingdom texting each day.

The UK mobile content market is worth approximately £1 bilion with around 50% of all revenue being sourced from 25 to 34 year olds. Mobile content expenditure is mixed although the majority of revenues were generated through sales in ringtone, realtones and screensavers, with games revenues increasing in importance. In addiition, full-track music downloads are also increasing their share of mobile content expenditure in the UK. UK consumers spent approximately £200 million on mobile music in 2010 and the popularity of this is only expected to increase. Video downloading is also expected to increase rapidly with approximately 11% of all content spend sourced from video downloading by the end of 2013.

Ofcom track the key facts of the telecommunications market and on average, during the third quarter of 2011, each mobile user on a subscription account sent 154 text messages each month. By the end of the third quarter of 2011, 91% of adults in the UK owned a mobile phone.

Interestingly, Twitter reported in May 2012 that out of their 10 million active users, 8 million UK users logged into their Twitter account over a period of a month using their service through a mobile phone. The global average for Twitter's worldwide customers is only 55% mobile phone access compared to the UK benchmark of 80%.

In May 2012, Telefonica UK which operates the 02 network in the UK, awarded Huawei a 5-year managed services contract to plan and manage its core mobile network. Under the terms of the contract, 56 permanent roles will transfer to Huawei, along with an additional 62 contractor roles.

Telefonica UK saw its total access base grow 1 percent in Q1 2012 to reach 23.3 million at end-March 2012, on the back of stable mobile base and positive fixed telephony growth which compensated a year-on-year decline in retail broadband fixed internet accesses. The mobile contract base increased 5 percent year-on-year to account for 50 percent of the total mobile customer base, which reached 22.3 million at end-March. Smartphone penetration increased to 41 percent in Q1 2012. Total revenue reached EUR 1.72 billion in Q1, down 6 percent from Q1 2011, impacted by a difficult trading environment and regulation. Excluding the impact from mobile termination rate cuts, revenues would have decreased 3 percent year-on-year in Q1. Total data revenues grew 1.2 percent year-on-year in the quarter to account for 48 percent of mobile service revenues. Total commercial costs rose 25.2 percent year-on-year, leaving an OIBDA of EUR 334 million. Capital expenditure in Q1 was up 18.9 percent year-on-year to EUR 198 million as it continued to further improve the coverage and capacity of its mobile network.

The following network operators are providing network coverage in the United Kingdom: