VATM releases comprehensive study of German market

21 Oct 2008

Verband der Anbieter von Telekomminikations und Mehrwertdienstein (VATM), the association of German telecoms operators which compete with incumbent Deutsche Telekom (DT), has released its annual study of the present situation in the German telecoms market. The study draws on historical data for the first three quarters of the year and forecasts for the final quarter to predict the lie of the land as at 31 December 2008. VATM’s Washington representative Dr Axel Spies told TeleGeography, ‘This is one of the most important and most thorough annual studies on the German market.’

Here are some of the highlights of the paper:

• Revenues for telecoms services in Germany in 2008 dropped by 4.1% year on year to EUR60.6 billion (USD81.3 million). The main reason for the fall is increased price competition in both the fixed line and mobile sectors.

• DT’s total fixed line market share by the end of 2008 is 60.3% (including resale) or 78.3% (excluding resale). Ten years after market liberalisation, the incumbent retains an overall market majority.

• The use of voice-over-internet protocol (VoIP) telephony has increased significantly in 2008; 5.6 million connections are forecast by the end of 2008, three times as many as there were at the end of 2007.

• Of 29.3 million broadband connections forecast for the year end, DT operates 57.3% (23.9 million in total). In the DSL segment, DT’s market share is three times as large as the combined total of its three closest competitors Arcor, United Internet and HanseNet.

• In the cellular market, an average of around 230 million minutes per day is expected for 2008, a yearly increase of more than 25%.

• The share of all investments in goods and facilities by VATM members for 2008 is 57%, and their total workforce rose slightly to 53,500, while DT’s employee numbers fell.

The study found that DT’s competitors depend heavily on DT’s resale products; even those operators with their own infrastructure rely on the incumbent’s ‘last mile’ and must pay an extra 6% of revenue for DT’s services in reaching the end-user. Those without their own networks must pay an additional 97 cents in the Euro in revenues to DT for its resale products. In the market as a whole, VATM members pass on 75% of their revenues to DT because they rely on the incumbent’s resale products and local loops. According to Dr Spies, as a result of this, VATM is very concerned that lightening regulation or the introduction of different regional tariffs will inflict significant damage on the competitive market.

The study also addresses the current economic slowdown and predicted that the telecoms market will contract by 3% to 4% during 2009. It reiterated the need for firms to become more efficient to recoup these losses.

A copy of the report may be found at (in German).