MWC's Millions: Hot-for-Profit in Barcelona

Mobile World Congress, arguably the most important single annual meeting point for the global communications networking industry, is a massive money-spinner for the GSM Association (GSMA) , its industry organization parent. But how much cash does it generate?

The answer: Hundreds of millions of dollars in revenues and tens of millions of dollars in profits.

Publicly available information shows that the GSMA's tax-exempt, "promotion of business" events and conferences arm -- called GSMA Ltd. -- generated revenues of $164 million and profits of $35.6 million in the year ending March 2014, the most recent financial year for which information has been filed with the US authorities.

GSMA Ltd., registered as a tax-exempt business since 2007, is responsible for more than just Mobile World Congress: It runs a number of one-day events (the Mobile 360 series) and the Mobile World Congress Shanghai (formerly Mobile Asia Expo), an annual event that began in 2012. The Shanghai event attracted 350 exhibitors and almost 40,000 attendees in 2015, according to the GSMA, so it is quite a sizeable event.

But it is dwarfed by the main Mobile World Congress, held each year in Barcelona. In 2015 it boasted almost 2,200 exhibitors and more than 94,000 attendees. And anyone who attends will know this event is not done on the cheap.

MWC is the GSMA's cash cow, but not its only source of income: The industry body also generates unspecified (and unreported) income from its membership fees from its 800 operator and 250 non-operator members to fund its various projects and activities.

But the GSMA confirmed that the profits generated by the GSMA Ltd. operation, which is headed up by John Hoffman, are fed back into the GSMA for its operational activities.

So exactly how big is MWC in financial terms and how much money does flow back to the parent organization? The exact breakdown of that single event's contributions to GSMA Ltd. are not disclosed but Light Reading's (conservative) estimates are that at least 85% of the event arm's sales come from the show and an even greater percentage of the profits.

The chart below shows how GSMA Ltd. has grown in recent years:

Table 1: MWC By Numbers

Year to March 2015 Year to March 2014 Year to March 2013 Year to March 2012 Year to March 2011
Revenues (millions) Not known $164 $148.10 $122 $97.10
Program/conference revenues (millions) Not known $158.40 $146.80 $119.30 $96.70
Profits (millions) Not known $35.60 $32.20 $22.90 $30.50
MWC attendees 94,000 85,000 72,000 67,000 60,000
MWC exhibitor numbers 2,199 1,800 1,700 1,500 1,400
Source: Various GSMA documents and press releases

If Light Reading is in the right ballpark with its 85% contribution estimate, then MWC revenues would have been in the region of $140 million in the year ending March 2014.

But the event has grown since then -- last year's Barcelona event had 20% more exhibitors and 10% more attendees than in 2014. Our back-of-the-envelope calculations put MWC's 2015 revenue numbers at around $165 to $170 million.

This year the show is going to be bigger again, with more than 100,000 attendees expected and more exhibitors. This year's MWC could generate as much as $180 to $190 million in revenues and, if the profit margin of 2014 is maintained, a surplus of about $45 million.

It's not just good for the GSMA -- it's good for the Barcelona economy too: Bean-counters have estimated that for the period 2012 through 2018, the event generates $5 billion of spending and trade for the Catalan city.

But is it good for the companies spending their money to exhibit at the show?

Exhibitor feedback
Light Reading spoke with several exhibitors, who provided feedback on condition of anonymity.

One senior vendor executive told Light Reading that MWC was a "major cost, not just for the floor space [more than $1,300 per square meter], which is very expensive and slightly more than last year, but for all the extra costs that are added on for site checks, fire alarms from a monopoly supplier, staffing and more. It costs hundreds of thousands of dollars. But we can't afford not to be there and the GSMA knows that. There is value to be had from the show if you work really hard at it -- you can set up a lot of meetings over a few days. But it's hard to justify such a big cost for some meetings... I can't see why they need to be so money-grabbing. It is a bit frustrating."

Another vendor noted that MWC is the only industry event for the comms sector with significant breadth and depth of visitors and that it is a "must attend" for business and networking opportunities but again noted that it's "very expensive -- you are held to ransom. And what goes up must come down -- CeBit used to be a must attend event only a few years ago but that changed very quickly. What goes up must come down…"

And there's no low-cost option either: Exhibitors have noted that even the smallest meeting room at the back of one of the halls at the Fira Gran Via, the event's main location, costs tens of thousands of dollars for the duration of the event.

The GSMA's CMO Michael O'Hara declined to provide any revenue breakdowns or offer any numbers for the 2015 or 2016 events but noted that this year is the first in the new Barcelona Fira location that is a sell-out -- all the space is taken. "There is still great demand to be at this event. The cost of exhibiting only went up by the rate of inflation, just 0.7%, compared with last year and for next year there will be no increase in charges for exhibitors," he added.

That might be regarded as good (or at least not bad) news for the companies now heading to north-east Spain for this year's jamboree but it's not likely to stop any of them wondering why the event has to demand quite so much of their annual marketing budgets.

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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kq4ym 2/23/2016 | 3:57:04 PM
Re: From small beginnings in Cannes.... It does seem that conferences have been a steady profit maker for years if will done and promoted heavily. With 100,000 folks showing up and expensive rents for exhibitors itt's no wonder millions are raked in as profits.
Steve Saunders 2/21/2016 | 10:42:33 AM
Re: From small beginnings in Cannes.... The telecom industry needs a big event, and MWC delivers it. It's interes that it's in Europe, not the US, but that has more to do with historical ineptitude by the trade associations in the US than anything else. GSMA gets a lot of credit for seizing their opportunity, but here are enough exhibitors complaining about the pricing that it must be argued that they have lost track of the fact that they are supposed to serve the community not fleece it.
jbtombes 2/19/2016 | 5:23:23 PM
Re: From small beginnings in Cannes.... COMDEX had similarly modest beginnings in Las Vegas. But as Sheldon Adelson and partners realized, esp when they sold it for $850+m in 1995, there's gold in them thar booths. At least, until there's not. As in 2003.
[email protected] 2/19/2016 | 3:57:49 PM
Re: From small beginnings in Cannes.... There is no open market, the GSMA are taking advantage of a monopoly position. LR or Informa or ITExpo can not compete with them - because they are the Industry's Trade Body. Just like the calls for structural separation between BT and Openreach. We need the same between the GSMA and MWC.
[email protected] 2/19/2016 | 3:54:39 PM
Change is required, but its unlikely to happen I wrote a few weblogs on this over the years: http://alanquayle.com/2015/02/mwc-broken/ & http://alanquayle.com/2014/02/mwc-2014-art-misdirection/. Not gone in several years. Its too big, too defocused and way too much BS. There is no ROI for exhibitors - check out the price gouging: https://twitter.com/Alan_Quayle/status/686600146713505792 and https://twitter.com/drogersuk/status/669153995039113216
sowen557 2/19/2016 | 2:10:03 PM
Re: From small beginnings in Cannes.... If you expect each of the 93000 visitors to pay majority of the €750 entry fee.  A Percentage will have the VIP packages upto €5000 each, mix in the booth sq meter fees, union costs, overpriced sandwiches and coffee bars $150M seems low in what they must make at GSMA.

cnwedit 2/19/2016 | 9:32:56 AM
Re: From small beginnings in Cannes.... The momentum for such monster shows is self-sustaining...until it isn't. Smaller companies stop going then a bigger one or two buck the trend. The ITU shows every four years used to have this appeal, and look at them now. 

The thing you have to admire, though, is the way MWC continues to draw CSP execs. As long as they keep coming the show is secure. 
R Clark 2/18/2016 | 8:50:49 PM
Re: From small beginnings in Cannes.... THe prices are ridiculous but it's always like this for the biggest trade show. I'm sure it's the same in other industries. It is a good event though which is why people keep coming. The Shanghai event is only four years old but is already the only annual Asian telecom show worth going to.
mendyk 2/18/2016 | 4:48:49 PM
Re: From small beginnings in Cannes.... If you speak to companies individually, they don't see big shows like MWC as being worth the effort and expense. But collectively, companies feel they can't afford to stay away. GSMA deserves a lot of credit for building this monster. But the monster lifespan is not indefinite.
TeleWRTRLiz 2/18/2016 | 3:58:35 PM
Re: From small beginnings in Cannes.... It's hard to imagine anything changing when upwards of 90K people go every year -- it's almost something that has become so ingrained in the industry culture that it will continue being the monster it is. It's like writing the check for your car insurance every year ... you know you have to do it.
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