Mobile network operator revenues undented by credit crunch

Europe’s mobile telecoms industry remains strong despite fears about the impact of the global credit crunch, according to a new report from global advisory and consulting firm Ovum, titled, Europe’s top MNOs unfazed by credit crunch.

Emeka Obiodu, senior analyst at Ovum, stated: “It is business as usual for Europe’s mobile operators. Whereas the markets expected them to take a hit from reduced consumer spending in their operational market, Europe’s mobile operators have continued to grow their revenues, with the economic downturn having little impact. Apart from isolated cases, the operators are more susceptible to their usual competitive dynamics than to any credit crunch.”

Ovum’s report tracked the revenue growth trends of Europe’s leading mobile operators in the region’s biggest markets from 2007 to date. It reveals that overall, mobile network operator (MNO) revenues have grown steadily. The revenue growth rate pattern in France, Germany and Italy suggests the operators are actually improving revenues. This is in contrast with operators in Spain which show evidence of sustained decline in revenue growth rates. The UK is mixed.

The report identified two key factors that have guaranteed steady revenue growth for Europe’s MNOs. Firstly, mobile services have now become quasi-utilities that people can no longer do without. Voice revenues may be falling, but more and more people are signing up for mobile phones even in markets with over 100% penetration rates. Secondly, to offset declining voice revenues, operators are turning their focus to non-voice services, with mobile broadband becoming a big hit for them.

Going forward, the report notes that these conditions will hardly change. Mobile phones will continue to remain popular and mobile broadband services will get even more users. Instead, operators have to worry about continued regulatory pressures on their businesses.

“In many of the markets where revenue is falling, we have observed that cuts in termination and roaming rates have had the most impact on revenue growth rates,” said Obiodu. “Given that European regulators are still advocating for more cuts in mobile data roaming, and are pondering an overhaul of the entire tariff structure for mobile services, MNOs face a daunting challenge for the future.”

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