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18
Vodafone Group Plc
Annual Report 2012
Industry trends
Scale
The mobile industry is one of the largest
communication sectors in the world with over
six billion users across the globe. In contrast
there are only 1.2 billion people with xed line
phones. The mobile industry generates around
US$960 billion of annual service revenue,
80%of which comes from people making
standard voice calls and sending texts. Over
the last ten yearsthe share of telephone calls
via mobile has increased from 20% to 74%,
reecting the benets of mobility. In 20111,
4.3trillion textmessages were sent (about
136,500 everysecond).
Growth
The demand for mobile services continues to
grow. In the lastve years the number of users
has increased by an average of 17% each year
driven by rising living standards, population
growth and cheaper mobile services
andhandsets. In 20111 86% of the world’s
population has a mobile phone, whereas ten
years ago this was only 16%. Most of the new
demand for mobile services is from emerging
markets such as India and Africa.
In India for example, the number of phone
users increased by over 140 million in just
oneyear, 20111, which is more than twice the
size ofthe UK population. Emerging markets
are growing quickly, and account for over
70%ofthe world’s mobile users. The rest live
indeveloped markets such as Europe and the
United States, where demand is growing more
slowly as most people already have a device
– in Europe for example there isalready an
average of 1.3 SIM cards perperson.
Competition
The telecommunications industry is highly
competitive, with typically at least four national
mobile network operators, such as Vodafone,
and one national xed line operator in each
country. In addition, there can be numerous
companies that rent capacity from mobile
operators and sell their own mobile services
tocustomers. In some countries there can
alsobe several independent distribution
companies that compete with the mobile
network operators’ own stores. Advances in
technology are bringing in newer suppliers,
such as internet based companies and
software providers offering converged services
such as voice over internet protocol (‘VoIP’).
Against this background, consumers have a
wide choice of providers.
Regulation
The mobile industry is very heavily regulated
by both national, European and other regional
and international authorities. Regulators
continue to impose policies to lower the cost
of access to mobile networks through setting
lower mobile termination rates (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
12% of service revenue for Vodafone.
In an environment of intense competition
andsignicant global regulatory pressures,
industry voice prices have tended to reduce
over time – andin 20111 fell 14%. However,
withmore mobile phone users and some
customers using their devices ever more
frequently, global industry revenue remains on
a positive trend and expanded 5% in 20111.
Where the
industry isnow
The mobile industry is a large and important sector with
six billion global users. Customer growth over the last ve
years has been rapid, drivenbythe benets of mobility,
falling prices and rising penetration inemerging markets.
However, pressures on revenue growth from competition
and regulation are signicant and are likely to remain.
a 86% of the world’s population use a mobile phone
a Competition is intense with typically at least four mobile operators in each
countryandnumerous additionalalternative communications providers
a Regulators continue to impose policies to lower the cost of access to
mobilenetworks
–222010
2011
2012
–21
–16
Outgoing voice prices per
minute (year-on-year change)
Vodafone data
%
106
Europe
US
Turkey 91
74
India
China 74
Mobile penetration 2011
Industry data calendar year
%
130
Mobile phone users by market 2011
Industry data calendar year
Europe 18%
Developed marketsEmerging markets
US 7%
Other 4%
Other 19%
Other Asia 14%
India 18%
China 20%
The industry data on pages 18 and 19 is sourced from Strategy
Analytics, IDC and Merrill Lynch Wireless Matrix.
Note:
1 Refers to calendar year.