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More Pain, No Gain for Europe's Telcos

Here's an industry view that provides little cheer at the start of the year: Europe's telecom operators invested more in 2011 but saw their revenues shrink.

That's according to the latest annual report from European Telecommunications Network Operators' Association (ETNO) , the industry organization that represents many of the region's incumbent operators.

It notes that Europe's carriers invested €44.5 billion (US$56.7 billion) in 2010 and that, according to its estimates, that figure rose by about 5 percent in 2011 to €46.7 billion (US$59.6 billion).

However, it also estimates that telecom service revenues generated by the region's operators (including those in Turkey but not those in Russia, Ukraine or Georgia) dipped by about 2 percent to around €269.4 billion ($343.2 billion) from 2010's €274.9 billion ($350.2 billion).

Clearly that's a trend that can't be sustained for too long: Eventually either revenues will need to start increasing or investments will need to decline. "EU [European Union] telcos have to develop new business models that will generate new revenue streams," notes ETNO Chairman Luigi Gambardella in his introduction to the report. "The continued increase in usage of social networking sites and other Over the Top Applications confirm the need for new models of cooperation," he adds.

While ETNO currently doesn't have any details for 2011, its report (which uses figures supplied by research house Idate ) shows just how much the fixed-line sector has declined in recent years. As the table below shows, fixed-line voice revenues dipped by 27.7 percent between 2005 and 2010, while mobile revenues grew by 11.3 percent, and data revenues grew by 33.5 percent.

Table 1: Total Telecoms Services Revenues in Europe
In billions of euros (except %) 2005 2006 2007 2008 2009 2010 Change 2005-2010
Fixed telephony 96.3 90.3 86.1 81.6 75.4 69.6 -27.7%
Mobile services 127.8 133.7 140.0 143.6 141.7 142.3 11.3%
Data & Internet 47.1 51.9 56.0 59.3 61.5 62.9 33.5%
Source: ETNO/Idate




— Ray Le Maistre, International Managing Editor, Light Reading

digits 12/5/2012 | 5:46:16 PM
re: More Pain, No Gain for Europe's Telcos

In 2010 the €45 billion was split about €24 billion on fixed and €20 billion on mobile networks, according to the report. No further breakdown, though.

Gabriel Brown 12/5/2012 | 5:46:16 PM
re: More Pain, No Gain for Europe's Telcos

Hi Ray -- does it say what the Euro operators invested the €44.5 billion in?

daveburstein 12/5/2012 | 5:46:09 PM
re: More Pain, No Gain for Europe's Telcos

Logically, I'd think
>
>  Eventually either revenues will need to start increasing or
> investments will need to decline.
>
> could just as easily have been
>
>  Eventually either revenues will need to start increasing or dividends
> will need to decline.
> ------------
>
> Although ETNO may not see it that way.


   A close look actually suggests dividends at several, especially Deutsche Telekom, are unsustainable. They are paying out more than earnings in order to keep the stock price up.


 


 


 


 

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