BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Telecomunications sector of Belgium

Signs that the Belgian fixed-line market may be moving back towards positive growth appear to have been dashed by an acceleration of losses at incumbent operator Belgacom. The operator lost 85,000 subscribers during the first half of the year, and while alternative and cable operators such as Telenet are still experiencing growth, we do not believe that this will be enough to offset the incumbent’s losses. As a result, we have revised our fixed-line forecasts downwards, predicting a drop of around 1% during 2006 as a whole. This would take penetration down to 43.7%. However, the outlook is more positive in the broadband sector, where strong competition between triple-play operators Belgacom and Telenet is helping to drive take-up. We forecast that penetration rates will exceed 20% by the end of 2006, which puts Belgium among Europe’s most developed broadband markets.

In the mobile sector, growth accelerated slightly during the second quarter of the year, although gains in the small Belgian market are relatively modest compared with other West European markets. Growth in Q2 came entirely from the two smaller operators, Mobistar and BASE, with market leader Proximus reporting a net loss of 7,000 subscribers. This is mainly due to the operator’s reluctance to get drawn into a price war in the prepaid sector; as a result, Proximus is concentrating almost exclusively on adding new contract subscribers. However, BMI believes that this strategy could be slightly misguided. Not only is it having no appreciable effect on the operator’s average revenue per user (ARPU) rates (which fell by 2.4% y-o-y), it could also be potentially depriving Proximus of future contract subscribers. This is the view taken at second-ranked Mobistar, which has focused its energies on upgrading existing prepaid customers to monthly post-paid plans. As a result, contract subscribers now account for 48% of its user base and its ARPU rates were up by nearly 6% on 2005.

Belgium finds itself once again at the bottom of BMI’s Business Environment Rankings for Western Europe. Belgium loses points for its competitive and regulatory environment due to the continuing state control of Belgacom. Indeed, Belgacom’s purchase of a 25% stake in Proximus from Vodafone, taking its holding to 100%, has increased the government’s interest in the telecoms sector. While Belgium’s relatively low penetration rates in the mobile and internet sectors do leave room for future growth, the small population means that absolute customer gains are likely to be limited.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Business Environment

West Europe Markets

Belgium

Table: Western Europe Business Environment Ranking

Belgium Telecommunications Industry SWOT

Chapter 3 - Industry Forecast Scenario

Fixed-Line

Table: Belgium Telecoms Sector – Fixed-Line Historical Data & Forecasts

Mobile

Table: Belgium Telecoms Sector - Mobile Historical Data & Forecasts

Internet

Table: Belgium Telecoms Sector – Internet – Historical Data & Forecasts

Chapter 4 - Macroeconomic Climate

Economic Activity

Table: Belgium - Macroeconomic Forecasts

Chapter 5 - Country Snapshot: Belgium Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Chapter 6 - Competitive Landscape

Market Overview

Table - Key Players: Belgian Telecoms Sector

Table: Selected Telecoms Operator Financial Indicators

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Internet

Table: Regional Broadband Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Market Data

Fixed-Line

Internet

Mobile

Table: Belgian Cellular Market Q106

Table: Belgian Cellular Market Net Additions, Q106

Table: Belgian Subscriber Mix (2005-2006)

Table: Belgian Wireless ARPU, 2005-2006 (EUR/user/month)

Table: Belgian Mobile Data ARPU, 2005-2006

Industry Developments

Roaming Charges

Chapter 7 - Company Monitor

Regional Case Study: Ericsson

Table: Major European Ericsson 3G Contracts

Selected Profiles – Operators

Belgacom

Mobistar

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Chapter 9 - Appendix: Regional Demographic Data

Wages (ave labour force per annum), US$ PPP

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Europe Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of European Telecommunications Sources

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BMI's European Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include:.