Australia’s mobile market declined for the first time in a decade as the number of connections dipped and international roaming plummeted, with analyst company Telsyte expecting the sector to remain under pressure over the next two years.

In the year to end-June, mobile service revenue fell 4 per cent to AUD13 billion ($9.5 billion) due to the impact of Covid-19 (coronavirus) lockdown measures. Telsyte said Optus and TPG Telecom (which recently merged with Vodafone Hutchison Australia) were impacted the most, while market leader Telstra maintained its market share due to its strong performance in the mobile IoT category.

Connections stood at 36.2 million at end-June, 62,000 lower than end-December 2019. Telsyte attributed the drop to a 5 per cent decline in prepaid subscriptions.

The MVNO segment bucked the downward trend as consumers looked for deals to manage their spending, accounting for 16 per cent of all services in operation at end-June, 2 percentage points higher on an annual basis.

Weak outlook
Telsyte forecast the number of mobile services in operation to remain at similar levels over the next 12 months to 18 months, with further consolidation of services leading to increased competition.

It expects more market consolidation as operators look to mergers for growth.

Senior analyst Alvin Lee said consumers will be the big winners in the next 12 months, as service providers battle it out with attractive offers.

Telsyte anticipates demand for 5G smartphones will take off in 2021 as coverage increases and more affordable mid-range models become available.

Less than 15 per cent of smartphones sold in the recent six month period were compatible, with fewer than 500,000 5G mobile subscribers.