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One mobile phone for every European by 2007

Launch of 3G will be catalyst

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Mobile penetration in Western Europe is expected to exceed 100 per cent by 2007, according to a new forecast issued by the research firm Analysys.

The company predicts that penetration of mobile phones will grow from 90 per cent in 2004 to 98 per cent by 2006, before reaching the 100 per cent mark the following year.

The launch of 3G around Europe will be the catalyst for growth, with consumers buying new mobile phones and SIM cards to avail themselves of new services, according to the report.

Analysys says that penetration has already exceeded 100 per cent in several countries, including Italy, Sweden and the UK. However, it has stagnated in some of the markets in which operators have placed significant emphasis on converting customers from pre-pay to contract in a bid to stabilise Average Revenue Per User (ARPU).

"In countries such as France and Germany operators have an opportunity to increase penetration by marketing pre-paid offerings, which is often the best way to attract certain segments of the population, but they should not lose sight of profitability," said Alex Zadvorny, analyst with Analysys and co-author of the report.

"Italy, where ARPU has been in line with the Western European market average and registered the slowest decline among the major European countries between 2000 and 2004, is a good example of how the prevalence of pre-paid does not necessarily suppress ARPU," he added.

Analysys predicts that voice ARPU in Western Europe is expected to stabilise, and that if operators take the right steps to take advantage of the data service opportunity, mobile service revenue is forecast to grow strongly at an annualised rate of nine per cent between 2004 and 2007.

"With the advent of 3G, operators have an opportunity to stabilise and potentially even grow voice ARPU by using the efficiency of the technology and offering large bundles of minutes," said Zadvorny.

"At the same time, in order to take advantage of the mobile data services opportunity, operators need to address factors such as transparency of pricing, standardisation and ease of use of devices, and the implementation of the relevant billing systems."

Copyright © 2005, ENN

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