Fixed-Mobile Bundles Drive Higher Spending Among Telecom Customers

The latest report from Analysys Mason highlights a lucrative business trend for telecom operators: customers subscribing to fixed–mobile convergence (FMC) bundles tend to exceed spending expectations, raising concerns that operators not offering these bundles risk missing out on significant upselling opportunities.
Average spend of customers on fixed and mobile servicesStefano Porto Bonacci, Senior Analyst at Analysys Mason emphasized that customers opting for FMC bundles demonstrate an unexpectedly higher average spend on combined fixed and mobile services compared to customers with separate fixed-only or mobile-only plans. This revelation defies the common perception that FMC bundles primarily attract discounted purchases while full-tariff services target other customers.

The distinct profile of FMC customers contributes to this paradox. FMC subscribers are inclined to opt for premium plans and invest in multiple products and services from their operator, distinguishing them from those purchasing services individually.

Operators hesitant to adopt or promote FMC strategies face the risk of overlooking these high-spending customers, according to the report. The challenge for operators lies in finding the balance between offering FMC bundle discounts and safeguarding profit margins. Some operators have already begun exploring alternative approaches beyond traditional discounting within FMC bundles.

Telecommunication companies are grappling with the intricate task of balancing discounts within FMC (Fixed-Mobile Convergence) bundles while safeguarding their profit margins. Some have ventured beyond conventional discounting strategies to entice customers with innovative FMC offerings.

VMO2, post the merger of Virgin Media and O2 in the UK, introduced Volt, a premium FMC offering in October 2021. This package, available to FMC customers, boasts perks like a broadband speed boost of up to 1Gbit/s, double mobile data, and inclusive Wi-Fi assurance, complete with up to three Wi-Fi pods. By 2Q 2023, over 1.5 million VMO2 customers had opted for Volt bundles.

In Belgium, Telenet employs a strategy of reserving exclusive services and features solely for FMC customers, incentivizing the adoption of FMC plans. Standalone services offer limited options, such as a maximum monthly data allowance of 5GB. Until early 2023, only FMC customers could access fixed plans with download speeds of up to 1Gbit/s. Despite a modest discount below 5 percent, Telenet saw a growth of over 20 percent in its FMC customer base from 2Q 2021 to 2Q 2023.

Meanwhile, Telefonica Spain revamped its FMC proposition in May 2022, replacing Fusion bundles with miMovistar, a more adaptable offering. FMC customers now have the liberty to tailor their bundles to suit individual preferences. Starting with a basic package of mobile and fiber services, they can add TV content and a variety of value-added services (like finance, energy, gaming, health, and home security) at any point during the contract. By the end of 1Q 2023, 30 percent of Telefonica’s FMC customers in Spain had transitioned to one of the new miMovistar bundles, while existing Fusion customers could switch at no additional cost.

fixed broadband connections that are part of an FMC package
Percentage of fixed broadband connections that are part of an FMC package, selected European countries, 2016–2022

The insights stem from Analysys Mason’s ‘Fixed–mobile convergence: consumer survey 2023’ report, which delves into churn intentions, satisfaction levels, and spending patterns among customers with bundled and separate fixed and mobile services.

Key findings from the report illustrate that customers availing themselves of both fixed and mobile services from a single operator tend to spend 13 percent more on average than those with separate plans. The research identified four customer categories, emphasizing the spending behaviors of those whose primary fixed and mobile services originate from the same operator.

Despite the association of FMC with discounts, the report reveals that overlapping customers consistently spend more, even in markets where FMC bundles are prevalent or heavily discounted.

Figure 1 illustrates the average total monthly spend in USD between customers taking fixed and mobile services from the same operator and those with separate services across surveyed countries in 2023.

Notably, overlapping customers demonstrate a penchant for purchasing additional services and top-tier plans, a trend attributed to their higher satisfaction levels with operators’ fixed services. Moreover, FMC bundle customers exhibit a propensity to explore supplementary services and products due to their contentment with fixed services, highlighting revenue expansion opportunities.

Operators reluctant to offer FMC bundles due to concerns of revenue cannibalization may need to reconsider. The unique spending behaviors and openness of FMC customers to additional offerings or premium plans often offset associated discounts, providing a promising avenue for revenue growth.

The Analysys Mason report urges operators to recognize the revenue potential tied to FMC bundles, emphasizing the easier upselling opportunities and enhanced customer retention linked with these bundled offerings.

Baburajan Kizhakedath