Filipino, UK operators lead the way in data revenue - Voice revenues continue to be squeezed due to pricing pressures

Data revenues are an important indicator of how advanced an operator's services (and customers) are becoming. As voice revenues continue to be squeezed due to pricing pressures in many markets, the ability to grow data revenues is becoming an ever more important priority. There are 70 operators within the GSMA Intelligence database that report data revenue as a percentage of total revenue. At the end of 2006 (Q4:06), data revenues averaged 16.70% of the total; this had risen to almost 19% (18.97%) a year later, a rise of 2.27%.

Data services revenue is traditionally dominated by SMS messaging, though increasingly concerns multimedia services such as mobile Internet, e-mail, picture messaging (MMS), music, content downloads and information services.

The two operators with the largest proportion of data revenues in fourth-quarter 2007 were Smart and Globe Telecom, both of the Philippines, a country renowned for its extremely high SMS usage. In both cases, the data revenue figure has been further inflated by the success of the operators' respective mobile money schemes: 'Smart Money' and Globe Telecom's 'G-Cash,' which offer mobile banking services such as money transfer and micropayments via mobile. The two schemes, which are both well established, generate significant SMS volume in their own right.

At first-place in our list Smart is the only operator in the sample to report greater data than voice revenue. According to company figures, data revenue grew 14% annually in 2007 to PHP44.1 billion (US$967 million), while voice revenue grew just 3% to PHP36.1 billion (US$791 million) over the same period.

Outside of the top two, Western European operators dominate the list of operators with the highest proportion of data revenues. The UK is particularly advanced with three of the country's four operators tracked in the sample in the top 20 (the fourth, Orange UK, is ranked 21st). Among the specific operator groups, Telefonica's O2 unit scores highest, with its UK (third-placed), Irish (12th) and German (13th) operations all making the list.

O2 UK is third-placed with data revenues at just under 36% and non-voice revenues of US$916 million. According to its official figures, data ARPU at the operator in Q4:07 contributed €11.1 to an overall (combined postpay and prepay) ARPU figure of €33.9. Non-SMS data revenue accounted for 15.9% of data ARPU, up from 12.5% in the year earlier period. The operator said that data revenues from non-SMS services grew 43.7% year-on-year and attributed the rise in part to the launch of the new 'bolt-on' unlimited data packages that it launched in October 2007. O2 was also the exclusive distributor of the first-generation iPhone in the UK during this period, which also offered unlimited data tariffs.

However, SMS still dominated data revenues at O2 UK. Its customers sent 6.2 billion text messages in the quarter, considerably higher than sister-operators O2 Germany (783 million), O2 Ireland (400 million) and O2 Czech Republic (835 million). As a consequence, the percentage of non-SMS data ARPU was higher at these operators: 25.7% in Germany, 31.3% in Ireland and 42% in the Czech Republic.

Joss Gillet, Senior Analyst, GSMA Intelligence:

Data services is a new battleground for mobile operators that have successfully launched high-speed networks. Although SMS still represents the vast majority of data revenues in most cases (as is the case in the Philippines), operators' key focus is to generate substantial revenues through non-SMS data. Telstra is a good example of such a success story: the Australian operator has recently reported that more than 50% of its data revenue now comes from non-SMS data.

The trigger for this trend is the widespread adoption of new mobile data services such as mobile Internet, mobile banking, social networking and location-based services. The adoption of mobile broadband is also an important breakthrough as we see the use of 'dongles' becoming a major trend accross most markets where WCDMA/HSPA networks are available. Areas of focus for operators looking to accelerate adoption of high-speed services and boost non-SMS data revenues include: 1) Network Coverage (operators should focus on increasing CAPEX to make high-speed networks available outside the main urban areas); 2) Prepay data plans (operators should extend data services to prepay users to reach mass market); 3) Simplicity (data offers and tariffs should be simplified and comprehensible for both prepay and contract markets); 4) Partnerships (increase the number of partnerships with third parties and content providers).