Data offsets slight fall in Irish telecoms spending

27 Jul 2005

Irish businesses are spending less on fixed-line telecoms services than before but the reduction is minimal and data services are compensating for the shortfall, new research from iReach has shown. Overall, the Irish telecoms sector is growing at a higher rate than many Western European countries, the company said.

Total telecoms spending in Ireland will be greater than €3.5bn this year, according to a mid-year review issued by the Dublin-based research firm. More than 90pc of this amount will be spent on a combination of fixed line and mobile communications. Total telecoms revenue is forecast to grow at 4.3pc this year – an additional €160m outlay by Irish businesses and consumers this year compared to 2004.

The fixed-line voice communications market is falling, as it is elsewhere, but iReach has said that this revenue decline will be marginal and is likely to be as low as a 1pc drop on 2004 figures. This stands in contrast to the international situation where many globally focused telecoms research houses are predicting a high single-digit percentage drop in fixed-line revenues. Speaking of the Irish market, iReach analyst and report author Brian Foley commented: “Predictions of revenue collapse in this segment are inaccurate.”

However, voice over internet protocol (VoIP) is starting to have an impact on fixed-line voice spending by residential and most especially corporate customers, iReach stated. “VoIP is a critical strategic issue for organisations and once which will increasingly find itself on IT decision-makers’ radars over the next 12-24 months,” the report said.

Any decline in voice revenues looks likely to be offset by very healthy growth in fixed-line data services, said iReach. Year-on-year growth in this sector is forecast to reach close to 17pc, which is considerably higher than the predicted yearly growth in Germany, Italy and the UK where increases are likely to range between 5pc and 12pc. “In real terms fixed-data revenues in Ireland will rise by almost €70m in 2005, compared with a fall in fixed-voice revenues of €15m,” the report said.

Mobile telephony in Ireland is also set to grow in terms of traffic and revenues. “It will be interesting to see how the Eircom purchase of Meteor will impact the local marketplace,” said Oisín Byrne, managing director of iReach. “We expect that while individual pricing may fall slightly in the mobile sector, this will be offset by increased voice and data traffic.”

By Gordon Smith