Key discussion

• As identified by our survey, fixed-mobile substitution will be a growing risk for the fixed broadband market. Telcos need to understand and manage the risk of consumers switching away from fixed-line to mobile, particularly in light of the upcoming availability of 5G.
• The increasing consumption of SVOD has driven the growth in fixed broadband in recent years. However, changing viewing habits, particularly towards viewership on mobile devices, could help spearhead mobile substitution.
• 30% of fixed broadband households are at risk of switching to mobile. These households exhibit a growing acceptance of wireless services and some doubts about NBN service quality.
• TPG’s entry into the mobile market will threaten both market share and APRU’s of the existing mobile operators. Our modelling presented two possible scenarios for discussion; a low case where TPG takes 12.5% of market share and a high case where TPG takes 25% of the market share. We note that the high case (although for discussion) is likely too aggressive given TPG will only be focused on 80% of the population.
• It is reasonable to expect TPG will reduce ARPU to well below current levels in an attempt to gain market share which will cause existing telcos to drop their own ARPU’s to defend territory.
• We expect pressure on fixed broadband to grow as the combination of 5G network launches and TPG’s mobile market entry will increase consumer interest and options for wireless broadband solutions.