Nobody's Perfect

1:55 PM -- Three of Europe's largest carriers have reported their latest financials this week, and the numbers show that each of the incumbents has a different ball and chain strapped to its corporate leg.

The trio -- BT Group plc (NYSE: BT; London: BTA), Deutsche Telekom AG (NYSE: DT), and Telefónica SA (NYSE: TEF) -- all have something in common, of course: That is, the domestic cash cow of fixed line voice is running dry. That's been the case for years. That's why, along with their peers, they have all diversified, looking for new lines of business. But with each new opportunity comes risk.

For DT, currently, it's the US market that's giving its CFO sleepless nights, as T-Mobile USA managed to lose customers during the first three months of this year. On the plus side, the German giant is having a happier time at home. (See T-Mobile Hangs Growth Hopes on HSPA+ in US, Deutsche Telekom Posts Q1, and T-Mobile's iPhone Advantage.)

Not so for Telefónica, as the Spanish economy is still in the doldrums and giving the carrier a few domestic issues. The good news is that, according to Pyramid Research , there are already signs that the Spanish market is in the early stages of recovery. (See Telefónica Reports Q1.)

Fortunately for Telefónica, its Latin American business is on fire, which is why it's prepared to open its wallet again to bolster its business there. (See Telefónica €5.7B Bid for Vivo Rejected.)

Of all the major European operators, Telefónica seems to have made the most of its international expansion plans.

BT, meanwhile, is something of an anomaly, in that it doesn't have a mobile business that can grow to counteract its shrinking fixed-line voice business. Instead, it has its international assets, with a network that stretches around the world to serve large multinationals.

Unfortunately, it's been having a few problems with its BT Global Services division, so it's been fighting fires at home and overseas. Overall, its revenues are on the decline (at least in the short-term).

Where BT seems to have done quite well is in cost control. In fact, it cut so much cost out of its operations in the past year that it clawed its way back to a £1 billion profit. (See BT Ramps FTTx Plans, Turns a Profit.)

While that's good news for its bottom line and its investors, cutting costs also comes with a price -- when any business loses 20,000 staff in one year, that's got to be having an impact on its intellectual capital.

— Ray Le Maistre, International Managing Editor, Light Reading

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