Vodafone 2016 Annual Report Download - page 10

Global market potential
8.5bn
mobile users expected by 2020
US$1.1tn
predicted mobile market in 2020
Growth in mobile data usage
petabytes (calendar year)
Estimate
Estimate
Actual
2015
2016
2017
36,000
52,000
72,000
2.2bn
xed connections by 2020
US$690bn
xed service revenue by 2020
Growth in pay TV customers
million (calendar year)
2015
2016
2017
875
910Estimate
Actual
939Estimate
Understanding
our marketplace
Our customers are demanding higher network speeds, reliable and secure
data connections, and a better customer experience. Against this background,
we can see great opportunities to create value, while managingrisks.
A fast-moving industry generating many new opportunities
What’s the scale and
structure of our market?
The communications market is growing as
more communities around the globe gain
access to new technology. The growth in
the number of mobile users continues its
momentum, now at 7.6 billion, up half a
billion since last year, generating US$1trillion
in annual service revenue. Much of the
momentum is coming from growth in
emerging markets such as Africa and Asia
due to the combination of large and relatively
young populations, fast GDP growth, increased
data usage and limited xed line infrastructure.
Global xed market
The global xed market has two billion
connections, generating US$678 billion in
2015, up 0.4% from 2014. This year revenue
from xed voice continued its decline as
users switched to using xed broadband
and mobile. We are also seeing an increased
take-up of pay TV, aligned to xed broadband
growth. These trends provide opportunities
for differentiation, as not all operators are well-
positioned to sustain the levels of investment
needed for higher-speed networks, providing
higher quality services for customers.
Competition
The industry is highly competitive with a large
number of providers in both xed line and
mobile segments. There are 12 major telecom
providers that are able to gain advantages
by leveraging size and scale. In addition
to competition between networks, over-the-top
applications have enabled companies to offer
data services via apps, increasing the number
of competitors further. In this environment,
Vodafone has differentiated its service through
high-quality network performance, and also
through converged offerings (mobile, xed
line, broadband, TV), allowing us to compete
more effectively.
Innovation
As more communities connect there has been
more investment in innovations such as mobile
money transfer, video and entertainment,
and the Internet of Things (formerly M2M).
Operators are upgrading their mobile
networks, providing 4G speeds of up to
450Mbps. This is allowing customers
to do more – moving from simply mobile-
working with smartphones and tablets
to now increasingly connecting cars, homes,
and cities. We anticipate 5G will become
commercially available around 2020, with
speeds of up to 1Gbps. This will reduce
latency and allow faster connections and
response times.
As we look to the future the number of
devicesconnected to the Internet of Things
(via mobile and other technologies) is
expected to grow signicantly, which will
massively expand the demand for data and
allow customers to use these new services
toincrease their productivity.
In the xed broadband sector, operators are
investing in more high-speed bre broadband,
which provides data speeds typically
up to 1Gbps, compared with up to 24 Mbps
on copper-based ADSL broadband.
Regulation
Regulators and policy makers continue
to have a signicant impact on the
structure and performance of the industry.
Regulators continue to lower mobile
termination rate (‘MTR’) fees, which are the
fees mobile companies charge for calls
received from other companies’ networks,
and to limit the amount that operators can
charge for mobile roaming services. These two
areas represent 10% of Vodafone’s service
revenue, down 11% from last year.
More on Regulation:
Page 183
Market overview
Notes:
1 Compound annual growth rate.
2 Vodafone’s benchmark tests.
3 Vodafone, “The Connected Future for SMEs”.
The industry data on these pages, unless stated, is from the
following sources: GSMA, Analysys Mason, Ampere Analysis,
Ovum and Strategy Analytics.
Vodafone Group Plc
Annual Report 2016
08