BMI's Executive Summary

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In the first nine months of 2007, the number of UK mobile subscribers grew by 2.3% to reach 72.248mn subscribers. The UK sector saw 0.37% in the first quarter and 0.66% growth in the second quarter, before seeing a 1.3% spurt in growth in Q307; based on these growth trends, BMI estimates that there were 73.837mn UK mobile subscribers at the end of 2007. Although this estimate is lower than our previous figure of 73.914mn, it is still based on anticipated Q407 growth rate of 2.2%, which is slightly higher than the 2.1% growth in Q406. We believe that the market will expand by another 2.4% in 2008 and by around 2.2% the following year. According to our newly-extended mobile forecast for the UK, we expect there to be just over 80mn subscribers in the market by the end of 2012, which is equivalent to a penetration rate of just over 127%.

According to figures published by UK regulator Ofcom, there were 7.8mn 3G subscribers in the UK at the end of 2006, equivalent to 11% total mobile users. These figures suggest slower growth for 2006 than BMI previously predicted; we previously suggested that the market would reach 8.5mn users by the end of 2006, equivalent to around 12% of total mobile users. Hutchison 3G continues to account for the largest share of the 3G subscriber market, with an estimated 3.985mn subscribers at the end of September 2007 (around 50% of the market). We are anticipating a steady migration from 2G and 2.5G customers to 3G services in the next few years. However, we have also downgraded our predictions and anticipate a more moderate rate of growth than before. We estimate that the 3G subscriber market to grow by 26% in 2007 and will expand by a further 21% in 2008. By 2012, we predict that there will be a total of 20.798mn 3G subscribers, equivalent to 26% of mobile users.

The growth of broadband services continued to be strong in 2007, with Ofcom reporting just over 14.365mn connections at the end of June 2007 – up from 11.517mn a year earlier. By the end of September 2007, BT had surpassed the 4mn broadband customer threshold, and was able to claim a leading 26.6% share of the market. BMI estimates that there were 16.087mn broadband customers in the UK at the end of 2007. This means that the number of broadband connections grew by 24% in 2007, with this growth helping to raise broadband penetration to 26.4% by the end of the year. We expect 2008 to be another year of strong growth, with market consolidation contributing to more intensified price competition. One impetus to growth will be the further expansion of local loop unbundling, with the proportion of unbundled BT exchanges now having surpassed 50%. Beyond 2008, our new broadband forecast for the UK anticipates slightly higher growth rates than before. We predict that there will be just over 31.5mn broadband connections by the end of 2012, representing a penetration rate of just over 50%.

Chapter 1 - Executive Summary

Chapter 2 - Business Environment

West European Markets

UK

Table: Western Europe Business Environment Ranking

UK Telecoms Industry SWOT

Chapter 3 - Industry Forecast Scenario

Fixed-line

Table: UK Telecoms Sector – Fixed-lines – Historical Data & Forecasts

Internet

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

Mobile

Table: UK Telecoms Sector – Mobiles – Historical Data & Forecasts

Key Risks to BMI Forecast Scenario

Chapter 4 - Macroeconomic Forecast

Upward Revision Of GDP Figures

Table: United Kingdom - Macroeconomic Forecasts

Chapter 5 - Country Snapshot: UK 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

Table: Wages per year

Chapter 6 - Competitive Landscape

Table: Key Players: United Kingdom Telecoms Sector

Table: Selected Operators’ Financial Indicators

Fixed-Line Overview

Table: Regional Fixed-Line Penetration Overview

Internet Overview

Table: Regional Broadband Penetration Overview

Mobile Overview

Table: Regional Mobile Penetration Overview

Market Data: Fixed-Line

Table: Exchange Line Numbers By operator (2005-2006)

Broadband

Table: UK Broadband Market Q106

Mobile

Table: UK Mobile Market Q306

Industry Developments

Chapter 7 - Company Monitor

Regional Case Study: Nokia

Table: Key European Contracts

Selected Profiles - Operators

BT

Vodafone

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

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:.