More than half (52 per cent) of Australia’s mobile services in operation are on 4G networks and penetration is expected to reach 85 per cent by 2020, according to Telsyte.

The country had more than 25 million mobile services in operation at the end of June, with more than half of handsets on non-contract plans, which leaves the door open for more movement between carriers, the research firm said.

Among those who switched mobile service providers last year, two-thirds opted for non-contract plans, an increase of more than 10 per cent over 2014. The firm found that more than half of consumers considering changing mobile operators are driven by price.

The firm believes Telstra’s high-profile network outages in the first half of the year, combined with more competitive 4G plans available, will encourage mobile handset service subscribers to shop around.

Telsyte senior analyst for mobile services, Alvin Lee, predicts price competition will likely see ARPU starting to decline for more operators in the second half of the year.

Lower M2M ARPU
M2M and secondary devices are expected to be the main drivers for future market growth towards 2020, while the increase of handsets in operation will be limited to net population growth as the market is highly mature.

However, non-handset services in operation typically have lower ARPU and do not contribute as much profit per service compared with handsets.

This might impact the profitability of carriers, the research firm said. Telstra is particularly vulnerable as it has experienced some of the lowest net services in operation additions from handsets ever during the six months to December 2015 and some 71 per cent of its new services came from lower ARPU M2M connections.

While Telsyte estimates Telstra will maintain a strong lead in the M2M market, other service providers are likely to attack its handset market share aggressively.

Lee said that despite the healthy growth, M2M services only accounted for less than 5 per cent of overall mobile services revenue.

The ability of networks to tap into growing mobile trends such as Pokémon Go and live streaming will help grow data utilisation by consumers. Last year the average growth of data allowances was 76 per cent. However, data usage only grew by 45 per cent.

Telsyte estimates that two million Australian smartphone users had downloaded Pokémon Go by the end of July.