United Kingdom 5G Forecast

Forecasting the annual mobile connection for the United Kingdom, broken down by operator and technology (including 5G) for 2018 to 2025. All figures assumptions and forecasts exclude IoT. The forecast is based on the historical connections for 2G, 3G and 4G from 2014 to 2018. Mobile Market Penetration The mobile market penetration exhibits a downward trend historically because a secondary SIM card is no longer in use as it is no longer needed. There is no need to do price arbitration for customers and/or churn between operators. Moreover, the prepaid segment is declining and MVNOs are also falling as is no longer necessary to have a secondary sim card to call abroad.
eSIM introduction will reverse the mobile market penetration trend

However, eSIM will make it easier to download profiles, counteracting the previous trend and re-instating some growth in penetration. eSIM will help also connectivity of tablets – a declining category but increasingly coming with embedded SIM – and laptops as Microsoft is embedding eSIM in their devices. The net effect is that penetration will start growing again (Graph 1), and the decline will be arrested. In this analysis smartwatches and wearable devices are considered to be IoT, therefore excluded from the numbers.  

Technology Migration

Regarding the technology migration in the UK mobile market, 2G networks will eventually be discontinued for cellular telephony and will be only kept alive to support legacy M2M SIM cards which are not included in this analysis. In the meantime, 3G will eventually disappear by the end of 2023. 4G will gradually give away to 5G. 2019 is the launch date of 5G, in 2H19, with most operators selling at least some devices. However, a real mass market proposition will not be available until 2020 or 2021 when all device makers will introduce 5G flagship devices.

5G will reach 35% of penetration by 2023 and 71% by 2025

As 5G networks become more widely available with the deployment of low-frequency bands, 5G network coverage increases. Eventually, 5G will be slightly faster than 4G in terms of deployment and adoption, but it will start ramping up from 2021 onward when population coverage is expected to reach 40-50%. 5G will reach 50% of penetration by 2023 and 60% by 2025 (Graph 2), overall being slightly faster than 4G adoptions.

Considering the mobile manufacturers, Apple will notoriously be the last one to launch 5G devices while all Chinese makers will try to increase their market share by introducing compelling 5G devices at an early stage. Xiaomi, OPPO, OnePlus and Huawei will use 5G to grow while Samsung and Apple will try to maintain their market position.

 

Operators Market Share

Concerning the operators market share, BT/EE will be able to maintain their market share thanks to their converged strategy which is proving a good retention tool. Vodafone too is adopting a converged strategy and will be able to keep a stronghold in the B2B segment.

 

Convergence strategy is the key for market share expansion

Three is currently in the expansion phase and will use 5G to reposition its brand while the other mobile-only operator, Telefonica’s O2, will eventually lose market share due to it protracted period of low-investments in networks resulting in poorer quality 

FWA Fixed Wireless Access (FWA) is the hottest topic in the industry when it comes to 5G. I expect Relish, a small company now part of Three UK, to acquire 250-300K subscribers by the end of the forecasting period in this very competitive market where there is high penetration of fixed broadband, albeit very little FTTH. Currently Relish is using LTE, but it is reasonable to expect that 5G will give them an extra chance to acquire more customers. 5G is cheaper than fixed broadband to deploy, but more expensive to run, making the economics of the wireless technology more challenging compare to the fixed one in the long run.

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