Fixed and mobile broadband to drive growth in Israel

Details: James Barton; Category: Trends & Forecasts; 02 December 2010; 10427 views

A new in-depth look at Israel’s telecommunications market indicates that its size has nearly peaked, but that growth possibilities still remain...

A new in-depth look at Israel’s telecommunications market indicates that its size has nearly peaked, but that growth possibilities still remain.

As the Israeli telecom market is more mature than other AME countries, growth will rely heavily on a combination of new services and new networks rather than on increasing penetration as growth slightly increases from $6.9 billion in 2010 to $7.1 billion in 2015, according to new research from Pyramid.

Over the next five years, the majority of growth in the Israeli telecom market will arise from fixed and mobile broadband, VoIP, and pay-TV. "As the ability to offer multiplay services becomes more important in the Israeli market, operators look for mergers or partnerships that will allow them to expand their product ranges. Differentiation through discounted bundles and value-added services becomes vital," says Kerem Arsal, Analyst at Pyramid Research. "With 85 percent of households having fixed broadband access and the proliferation of 3G networks by all mobile players, the market is ripe with opportunities for convergence and multiplay offers," indicates Arsal. As data usage gains increased importance and the IP-based networks roll out, the opportunities for convergence will be rich.

"Recent announcements for upcoming 4G and LTE networks will provide numerous opportunities - we expect LTE subscriptions to reach around 12 percent in 2015. In Israel's highly competitive market, vendors will also find lucrative opportunities to help operators who are currently considering and/or delivering attractive content, particularly multiplay offerings," he adds.

"New and soon-to-be-licensed MVNOs provide further opportunities to virtual network enablers. Finally, when the MoC issues mobile WiMax licenses, vendors can look forward to new WiMax rollouts," says Arsal.

The Israeli telecom market is relatively stable in terms of size, with growth projected to go from $6.9bn in 2010 to $7.1bn in 2015. However, the market is currently changing as data revenue is growing to substitute for declining revenue generated by circuit-switched voice services. Accordingly, mobile data and fixed broadband Internet will grow at CAGRs of 13.4% and 7.8%, respectively, between 2010 and 2015, while fixed voice drops by more than half and the mobile voice market shrinks by about $0.5bn during the same period. The rise of data services will be driven on the mobile side by an aggressive race among the operators to expand their 3G subscriber bases. On the fixed side, growth of data will be propelled by the introduction of IP-based next-generation networks by the incumbent Bezeq, while the phase-out of the circuit-switched networks gains speed.