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COVID Kills Decade-Long Growth Period For Aussie Mobile Services

New figures from tech analyst firm Telsyte shows that the Australian mobile services market was decimated by COVID-19, with the total number of Services in Operation in 2020 falling by 606,000 from the previous year.

This 1.7 per cent fall marks the first drop in a decade, and is in stark contrast from the typical increase of 800,000-1.1 million a year that we’ve seen since 2016.

According to the study, the decline was primarily due to our closed borders, which killed the prepaid handset market favoured by “temporary visitors”, newly-arrived migrants, and international students.

Not surprisingly, TPG Telecom and Optus were the most heavily impacted, losing 15 and 9 per cent respectively of their total mobile SIOs in 2020.

Interestingly, the mobile virtual network operator (third-party services providers that don’t own the wireless network infrastructure they sell, such as Amaysim) outperformed mobile carriers, which Telsyte put down to consumers looking for better deals.

“The segment’s total SIO grew by 13 per cent during the same period,” the study founds, “as 1 in 6 mobile users switched service provider during 2020, mainly due to finding a better deal. If carriers’ sub brands are excluded (e.g. Belong, Gomo, felix Mobile), the MVNO segment still grew 14 per cent during the same period.”

MVNOs made up 16 per cent of total SIOs at the end of 2020, up 2 per cent from 2019.

Telsyte expects this downturn to ease this year, however closed borders will result in continued impacts from limited population growth.

“The current climate is challenging for low-margin players and it will be increasingly difficult for mobile service providers to continue to compete only on price,” Telsyte Senior Analyst, Alvin Lee, says.

The increased number of 5G handsets available has resulted in a sharp uptick of 5G mobile services, with an estimated two million in operation at the end of 2020, increasing from the 400,000 that were operational six months prior.

Telsyte anticipates that “more than 60 per cent of smartphones sold in 2021 will support 5G”, with mobile virtual network operators expected to follow suit. This will help the Australian market improve, as demand is expected to lead to over 55 per cent of SIOs on 5G by 2024, compared to the current 6 per cent.

5G won’t just impact mobile usage, according to Telsyte’s most recent consumer survey, which found 25 per cent of Australians are “interested in subscribing to home Internet services based on 5G, citing “the flexibility of installation and the prospect of ultra-fast Internet speeds”. They note this is particularly appealing for gamers and share houses.

Telsyte estimates over one million Australian homes will opt for 5G fixed home internet services over NBN by 2023, with mmWave speeds, prices, and unlimited data caps the main selling points.

“5G home Internet services are increasingly strategic to carriers as they look to drive value out of their infrastructure investments” Lee says.

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