Released on = April 16, 2007, 3:25 am

Press Release Author = Bharat Book Bureau

Industry = Marketing

Press Release Summary = The mobile phones industry in the UK has grown rapidly in
recent years. In 2003/2004, it was worth £13.97bn - more than double its value 5
years earlier.

Press Release Body =
Mobile Phones - Market Report

The mobile phones industry in the UK has grown rapidly in recent years. In
2003/2004, it was worth £13.97bn - more than double its value 5 years earlier. This
market now accounts for approximately 40.3% of the revenue accrued by the entire
telecommunications market and the proportion of voice minutes on cellular networks
is now a third of the telecommunications total.

The majority of the industry\'s revenue still comes from voice calls, although the
proportion of income generated by non-voice services will continue to increase as
the uptake of 3G (third generation) gathers pace. Revenue from text and picture
messaging continues to show impressive year-on-year growth.

The industry is now entering a crucial phase as the transition is made into the 3G
era. The advent of new technology constitutes a risk for the established operators,
because it upsets the status quo whereby the largest players have been able to build
their revenue streams in a relatively predictable environment. Extra network
capacity will result in cheaper voice calls and the squeezing of this revenue stream
will be exacerbated by the presence of virtual operators attempting to differentiate
on price. A worst-case scenario for the network providers is a prolonged price war
that significantly reduces operating margins (although voice calls on 3G will cost
the operators less than 2G - second generation - voice calls). The consumer is
likely to benefit as network providers offer better deals on voice calls, other
services and handsets, in their attempts to maintain or increase market share.

The arrival of 3G consumer services and the increased convergence of technologies
also represents a great opportunity for the main operators. Market saturation,
increased competition and regulation on termination charges are decreasing margins
from voice calls, which means that non-voice services offer the best potential for
industry growth. In addition, they represent an opportunity to gain a return on
investment and assets, following the huge outlay on 3G licences and preparation of
networks. There will be winners and losers, with operators enjoying different levels
of success in marketing their 3G services and increasing average revenue per user
(ARPU).

Growth in this market will be dictated by how quickly 3G penetrates the mass market
and the speed at which the main operators are able to increase their income from
non-voice services. Operators will need to differentiate themselves effectively on
the quality of 3G services by ensuring that the best content is available in the
most user-friendly formats. The operators could also benefit from increased use of
mobile phones, if cheaper voice calls encourage people to make greater use of
cellular networks at the expense of fixed networks.

The industry will continue to grow in value, but increased revenue from non-voice
services will be offset by tighter margins on voice calls and the `cannibalisation\'
of 2G revenue streams. The most successful operators will be those that are best
able to differentiate their 3G services while also building market share by offering
the most competitive voice bundles.

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