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Europe Telecom Insider/Vol. 3, No 2, Edition 6 - Coopetition Replaces Competition as Telcos Aim to Cut Costs and Grow Revenue Streams
Pyramid Research, Inc, June 2011, Pages: 17
With subscriber penetration levels rapidly reaching saturation and voice revenue showing a negative growth trajectory, operators doing business in Western Europe are taking an increasingly collaborative approach to their market interactions, according to a new report.
Coopetition Replaces Competition as Telcos Aim to Cut Costs and Grow Revenue Streams analyzes the development of the cooperation agreements among a number of European telecom players, their successes and also learning points for those considering future tie-ups. Pyramid will first discuss those initiatives employed by operators to maintain their market position and leverage their existing customer relationships. Then Pyramid will contemplate those initiatives that address balance-sheet woes and existing revenue streams, and finally look at partnerships that are focused on new revenue streams and the development of standardization across new technologies.
'In the face of changing consumer trends, operators must try to preserve their EBITDA (earnings before interest, tax, depreciation and amortization) margins and thus are looking to reduce spending and maximize their profit,' says Pyramid Research Analyst Sylwia Boguszewska. 'However, as penetration levels are reaching saturation in both the fixed and mobile space, there is negative growth expected from the former cash cow of voice. This forces operators to turn their focus to the existing streams of broadband and value-added services, such as applications, to provide stability and growth over the next five years,' she adds.
Pyramid Research believes that there will continue to be more cooperation and collaboration between European telcos and other players at every stage of the value chain, with a focus on those initiatives that will lead to new revenue streams. 'Although these partnerships often take incumbents away from their core areas of focus, the ability for them to innovate through these partnerships and have a say in the future developments of the TMT marketplace will be critical to their future successes,' states Boguszewska. 'It will also have a positive feedback effect on their existing business segments of fixed and mobile communications,' she continues.
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