PMR: the boom on the mobile Internet market in Poland continues. Monetization of 5G is so far hardly visible in the results of telecoms
PMR estimates the value of the mobile internet market in Poland in 2020 at PLN 6.2bn. This represents annual growth of 7%. The forecast CAGR for the value of the market between 2021 and 2026 is 4.9%. The greatest earning potential of operators lies in the segment of “data” services in smartphones. However, services in dedicated access, excluding offers in fixed locations, are losing importance. The degree of monetization of 5G services in Poland is currently disputable – everything depends on the pricing policy adopted by operators and the distribution of data packets in dedicated access (limited or no access).
According to PMR data, in 2020 the value of the Polish mobile internet market increased by 7% year-on-year to PLN 6.2bn, accounting for a quarter of mobile operators’ total revenues. The market is positively affected by both volume trends and growing/stable ARPU per service. The key segment of the market, which builds its value is the “data” services in phones. On the other hand, dedicated mobile internet, as a product category, is losing its importance due to the growing popularity of mobile internet services in voice tariffs for smartphones and competition from fixed lines. However, the market’s dampening factor in the dedicated access segment is mobile broadband offers in fixed locations (home/office), classified as directly substitutable for classic broadband.
The COVID-19 crisis had a neutral-positive impact on the value of the mobile Internet market in Poland. The core business of mobile telecoms remains relatively immune to the effects of the pandemic. An important element underpinning the market’s position during the crisis is its maturity and strong saturation with services, especially data transmission, and its rootedness in subscription services, which ensures relative stability and predictability of revenue streams. However, pandemic conditions have, to some extent, accelerated the growth of smartphone internet users and massaged the heavy user group, i.e. those who use the internet on a daily basis for an increasing number of digital services (mainly audio and video streaming and gaming). This had a positive impact on the total market value.
Data services on phones are a must-have among smartphone users
The growth of mobile internet users on mobile accelerated in 2020. Thus, at the end of last year, more than 20 million Poles aged 15+ used mobile transmission on a smartphone. The market volume is being built up by a number of important factors, such as the popularization of “data” services in smartphones, the development of LTE, LTE-Advanced, and 5G technologies, rich digital content for mobile devices, and customer loyalty under subscription offers.
In parallel, mobile data ARPU in the handset segment is growing. The main drivers are the 2019 mobile price increases, 5G tariffs and operators’ focus on building revenue value, growing demand for mobile data (mainly in smartphones) and consumption of increasingly higher data bundles, as well as the migration of pre-paid customers towards subscription offers.
Access in a dedicated model: competition from smartphones and fixed lines
Although the dedicated mobile internet segment (“modem/card + PC”) is losing its importance as a result of competition from smartphone data packets and classic broadband, PMR expects the number of such accesses to grow further in 2020. The volume of the dedicated mobile internet market is positively affected by the relative popularity of fixed-line offers. Their attractiveness cushions the market and protects it from decline.
PMR estimates that the penetration of mobile and fixed broadband is similar – the effect of the complementarity of services, the development of fiber optics and the underdeveloped fixed infrastructure outside big cities. However, PMR sees a competitive advantage in terms of consumer preferences for internet service parameters on the side of fixed lines. In the case of fixed-line access, the bargaining chip is the growing importance of fibre-optics as an access technology, also outside big cities.
ARPU from “data” services in the “modem/card + computer” segment has been on a slight downward trend in recent years, with a tendency to stabilize. Customers of these services are more price-sensitive compared to mobile data transmission in phones. In addition, there is competition from fixed-line internet. On the other hand, sales of fixed mobile internet offers (home/office offers) have had a stabilising effect on ARPU.
Market forecasts and monetization of 5G services
PMR forecasts that the growth trends on the Polish mobile internet market will continue in 2021-2026, both in terms of volume and quality. However, the growth trend in volume will slow year on year. This is largely due to market saturation and scale effect, which limit further expansion. Consequently, the number of mobile Internet accesses will tend to stagnate.
According to PMR’s forecasting model, the value of the mobile internet market in Poland will grow at an average annual rate of 4.9% over the next six years. The growth will be driven mainly by the ‘data’ segment in handsets – the effect of the ‘more-for-more’ strategy, growing mobile data consumption in smartphones and cyclical sales of voice tariffs with 5G network access.
On the other hand, PMR does not expect mobile operators’ data revenues to surge in the forecast period due to the development of 5G technology. PMR believes that in the coming years, following marketing positioning efforts, prices of 5G tariffs will be lowered. In correlation with the gradual transition of users to the fifth-generation technology, this will not result in sudden movements in the market in value terms. Similarly, in connection with the development of 5G networks, PMR does not expect Poles to make a collective move to mobile connections with “modem/card + computer” access. Such a trend is limited by the high importance of fixed lines and the growing importance of fibre-optic technology. Moreover, PMR believes that 5G will revolutionize the Polish economy, not the consumer market. On the other hand, some impact of 5G technology on ARPU per service and market value is evident in the forecasts.
For more information, see the PMR report: “Mobile internet and value-added services market in Poland 2021: Market analysis and growth forecasts for 2021-2026“.