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Globalisation and Consolidation of the Telecom Industry
Frost & Sullivan, Dec 2010, Pages: 91
The mobile and wireless industry in Europe is facing a number of challenges and as a result, the mobile operators are looking at a variety of opportunities to retain their subscribers and revenue market shares. One of the recent trends that is emerging in the saturated mobile and wireless markets in the Europe is that of consolidation of telecom operators. In order to understand the present merger and acquisition trends among the various telecom operators, the study defines the major drivers and restraints for consolidation of the industry participants. The study also analyses three major mergers and acquisitions among telecom operators in Western Europe.
This Frost & Sullivan research service titled Globalisation and Consolidation of the Telecom Industry: Mobile and Wireless Perspective explains the challenges, drivers and restraints for telecom operators in Europe. The research forecasts the revenue, subscriber growth and technology adoption rates for the major telecom operators in five Western European countries. It analyses the mergers and acquisition trends in Europe and outlines the major drivers and restraints for globalisation and consolidation for telecom operators. The research also analyses a few recent mergers and acquisitions in the Western European region. In this research, Frost & Sullivan's expert analysts thoroughly examine the following technologies: 2G, 3G, 4G and LTE.
Market Overview
Telecom Operators Increasingly Opt for Consolidation
The mobile and wireless industry in Europe is facing numerous challenges. This is motivating mobile operators to investigate a range of opportunities to retain their subscribers and revenue market shares. One of the recent trends that is emerging in the saturated mobile and wireless markets in Europe is that of consolidation among telecom operators. With a number of market participants unable to face the crisis of lowered average revenues per user (ARPU) and reduced funds for implementing next-generation networks, exploring new markets and merging or acquiring other participants in existing markets has become inevitable. “Intensifying competition from new participants has resulted in incumbents devising innovative pricing plans to improve both data and voice ARPU,” notes the analyst of this research. “Post-paid customers are poised to play an important role since they are the major revenue contributors.” Promisingly, the number of prepaid customers has been increasing rapidly. In order to retain existing customers and attract new users, it has become necessary to design novel pricing plans that would boost revenues, while also satisfying consumers.
Next-generation technologies are being developed and tested in order to cater to the need for enhanced speed and capacity. A number of services and applications are increasing the use of mobile phones in areas such as healthcare and banking in order to improve their efficiency and effectiveness. These services would require better quality of service and capacity. “However, new participants are not in a position to invest in next generation infrastructure,” cautions the analyst. “As a result, they may have to merge with other prominent participants who have the necessary funds to deploy next generation infrastructure.” The investment costs for setting up LTE infrastructure - which is going to be the future technology of communication - is very high. Due to the poor financial performance, some MVNOs have opted to merge with major mobile network operators (MNOs).
Innovation is Key to Success
Telecom operators are offering flat-rate plans and other provisions at lower prices to attract customers and augment market share in terms of number of customers. At the same time, with the increase in the use of data services, telecom companies are offering better services to boost data ARPU. The entry of new participants in the telecom market has resulted in significant price wars. To gain market share, entrants reduce tariffs, resulting in the lowering of ARPU. The price wars have widened the number of options available for consumers, sparking a trend of huge churn rates. Thus retention of customers has become the most important challenge for telecom operators
Attracting new subscribers while retaining existing market share with respect to both subscribers and revenues will be critical to success. In order to improve the scale of operation in the countries in which they are operating, many major telecom participants have been looking at merging with smaller competitors. “Strategic mergers and planned acquisitions will definitely help the partnering telecom operators to address the various challenges together,” advises the analyst. “With innovation being the key for developing applications and services, these partnerships should also focus on incorporating innovation into their services to gain revenues in the saturated telecom markets.”
Technology
The following technologies are covered in this research:
- 2G
- 3G
- 4G
- LTE
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