European Mobile Industry: “The Future is not Bright, it’s Brutal”, says ‘Telco 2.0’ Initiative

Core Revenues will drop by €20Bn by 2016 and €30 Bn by 2020 says new report

The mobile industry’s combined revenues from voice, messaging and data services in the EU5 economies (UK, France, Germany, Spain and Italy) will drop by nearly €20Bn, or 4% per year, in the next five years, according to a new report published today by the Telco 2.0 Initiative.

This is much bleaker than most current industry forecasts that typically predict a mild decline of c.1-2% per annum.
“It’s like the fable of the ‘Emperor’s new clothes’” says Chris Barraclough, Chief Strategist, Telco 2.0, and report author. “Nobody in the industry wants to say it, but the outlook is very unpleasant.”

The forecast is worst for Spain which is not only suffering from a weak economy, but also has relatively high voice prices compared with other European markets that Telco 2.0 anticipates will reduce substantially going forward.

The core issue, says Barraclough, is that the traditional business model (how telcos make money) is under pressure. “The new competition from Internet-based services, such as Facebook, Apple’s iMessage, WhatsApp and Skype, is making an increasing impact. In essence, users are starting to get cheap calls and new forms of communication from other providers.”

Existing competition, regulation and economic woes compound the pressure, and the new revenue streams, such as mobile data, just aren’t growing fast enough to make up the gap.

“The telecoms industry needs radical change”, Barraclough says. “Cost cutting is important but it can’t solve the industry’s real problem which is that less money is coming in. The industry needs new sources of revenue and profit or will be a very different, and much smaller, beast within five years.”

The industry now needs to innovate as well as manage the core business. “Many of the telcos have started on this path, for example Telefonica Digital, but even they are in the earliest stages of this process. No operator has a well-developed new business models and set of services and, unfortunately, time is not on their side.”

“The good news is that there are opportunities for telcos to create a new future – we call this ‘Telco 2.0’. These opportunities lie in business-to-business services that re-utilise telco assets, including mobile commerce, cloud services, machine-to-machine (M2M), and digital entertainment as well as better business-to-consumer offerings. We’re publishing a lot of new research showing the way ahead in these areas in the next few months” says Barraclough.

If you have any comments please click the link
Comments 0

Leave a Comment