Globalisation and Consolidation of the Telecom Industry

Frost & Sullivan, December 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

1. Executive Summary
1.1 Key Findings
1.2 Research Methodology and Scope

2. Mobile and Wireless Industry in Western Europe
2.1 Evolution of Cellular Technology in Europe
2.2 Market Engineering Measurements
2.3 Industry Challenges
2.4 Market Drivers
2.5 Market Restraints
2.6 Assumptions for Forecasting
2.7 Subscriber Forecasts
2.8 Revenue Forecasts
2.9 Technology Market Share Forecasts
2.10 Major Market Participants

3. Overview of Mergers and Acquisitions in Europe
3.1 Consolidation Trends in the Telecom Industry
3.2 Telecom Mergers and Acquisitions in Europe
3.3 Major Mobile and Wireless Transactions
3.4 List of Major Mergers and Acquisitions
3.5 Analysis of Major Mergers and Acquisitions

4. Impacts of Mergers and Acquisitions
4.1 General Impacts of Mergers and Acquisitions
4.2 Impacts with Respect to Industry
4.3 Impacts with Respect to Company
4.4 Impacts with Respect to Country
4.5 European Union and Mergers

5. Drivers and Restraints for Globalisation and Consolidation
5.1 Drivers for Globalisation and Consolidation
5.2 Restraints for Globalisation and Consolidation

6. Merger and Acquisition Cases
6.1 Acquisition of O2 by Telefónica
6.2 Acquisition of Fastweb By Swisscom
6.3 Orange and T-Mobile UK Merger
6.4 Innovation and Mergers

7. Conclusion
7.1 Reasons for Successful Telecom Mergers
7.2 More Globalisation and Consolidation in the Future
7.3 Markets Ready for In-country Consolidation
7.4 Implications of Consolidation in the European Union

8. About Frost & Sullivan

List of Figures

Mobile and Wireless Market: Impact of Challenges (Western Europe), 2009
Mobile and Wireless Market: Impact of Drivers (Western Europe), 2009
Mobile and Wireless Market: Impact of Restraints (Western Europe), 2009
Mobile and Wireless Market: Subscriber Forecasts (Western Europe), 2009
Mobile and Wireless Market: Service Revenue Forecasts (Western Europe), 2009
Mobile and Wireless Market: Technology Market Share Forecasts (Western Europe), 2009
Mobile and Wireless Market: List of Major Mergers and Acquisitions (Europe), 2009
Mobile and Wireless Market: List of Major Mergers and Acquisitions (Europe), 2006
Mobile and Wireless Market: List of Major Mergers and Acquisitions (Europe), 2007
Mobile and Wireless Market: List of Major Mergers and Acquisitions (Europe), 2008
Mobile and Wireless Market: List of Major Mergers and Acquisitions (Europe), 2009
Mobile and Wireless Market: Analysis of Major Mergers and Acquisitions (Europe), 2005-2009
Mobile and Wireless Market: Performance of Everything Everywhere in Q2 (United Kingdom), 2010
Mobile and Wireless Market: Acquisitions Aimed at Gaining Expertise (Europe), 2008-2010
Mobile and Wireless Market: In-Country Consolidation (Western Europe), 2010

List of Charts

Mobile and Wireless Market: Evolution of Cellular Technology (Europe), 2009
Mobile and Wireless Market: Market Engineering Measurements (Western Europe), 2009
Mobile and Wireless Market: Industry Challenges (Western Europe), 2009
Mobile and Wireless Market: Subscriber Forecasts (Western Europe), 2009
Mobile and Wireless Market: Service Revenue Forecasts (Western Europe), 2009
Mobile and Wireless Market: Technology Market Share Forecasts (Western Europe), 2009
Mobile and Wireless Market: Market Share of Major Market Participants (Western Europe), 2009
Mobile and Wireless Market: Telecom Mergers and Acquisitions (Europe), 2009
Mobile and Wireless Market: Major Transactions (Europe), 2005-2009
Mobile and Wireless Market: Steps Involved in the Approval or Disapproval of Mergers by the European Commission (Europe), 2009
Mobile and Wireless Market: Drivers and Restraints for globalisation and Consolidation (Western Europe), 2009
Mobile and Wireless Market: Percent of Revenue Contributed by Each Region of Telefónica (World), 2005
Mobile and Wireless Market: Percent of Subscribers Contributed by Each Region of Telefónica (World), 2005
Mobile and Wireless Market: O2 Group Revenue (Western Europe), 2003-2005
Mobile and Wireless Market: Number of Subscribers for O2 (Western Europe), 2003-2005
Mobile and Wireless Market: Contribution from Operations in Various Countries to the Total Revenue of Telefónica (World), 2004-2009
Mobile and Wireless Market: Revenue and EBITDA of O2 (United Kingdom), 2003-2005
Mobile and Wireless Market: Shift in the Market Share of Telefónica (World), 2005-2009
Mobile and Wireless Market: Implications of Acquisition of O2 by Telefónica (Europe), 2006
Mobile and Wireless Market: Acquisition of Fastweb by Swisscom (Italy), 2010
Mobile and Wireless Market: Number of Customers for Fastweb (Italy), 2001-2006
Mobile and Wireless Market: Revenues and EBITDA of Fastweb (Italy), 2001-2006
Mobile and Wireless Market: Revenues of Swisscom , (Italy) 2006-2010
Mobile and Wireless Market: Revenues of Fastweb, (Italy) 2007-2010
Mobile and Wireless Market: Implications of Merger of Swisscom and Fastweb (Italy), 2010
Mobile and Wireless Market: Number of Subscribers (United Kingdom), 2005-2009
Mobile and Wireless Market: Implications of T-Mobile UK and Orange Merger (United Kingdom), 2010
Mobile and Wireless Market: Reasons for Successful Telecom Mergers (Europe), 2010

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