European Wireless Carriers Avoid Impact of Global Credit Crisis

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European Wireless Carriers Avoid Impact of Global Credit Crisis

1:15 am on September 30, 2008 | Category: Business, Wireless, Corporate, Regulation

The global credit crisis and resulting turmoil on world financial markets have not phased Europe’s mobile phone industry, according to a new report by consulting firm, Ovum.

“It is business as usual for Europe’s mobile operators,” commented Ovum senior analyst, Emeka Obiodu. “Whereas the markets expected them to take a hit from reduced consumer spending in their operational market, Europe’s mobile operators have continued to grow their revenues, with the economic downturn having little impact. Apart from isolated cases, the operators are more susceptible to their usual competitive dynamics than to any credit crunch.”

Continent-wide revenue from mobile services continued to grow steadily since economic problems became apparent in 2007, and in some markets (including France, Germany, and Italy), growth rates appear to have increased.

In explaining the factors that have protected the wireless industry from economic troubles, Ovum noted that mobile voice service has become a quasi-utility that consumers cannot do without. Although this commodification of mobile voice service has led to a gradual decline in the price of wireless calls, this has been offset by the massive growth of mobile data services.

Going forward, it is not the impact of financial conditions, but the effects of regulatory changes that European mobile network operators need to worry about.

“In many of the markets where revenue is falling, we have observed that cuts in termination and roaming rates have had the most impact on revenue growth rates,” Obiodu says. “Given that European regulators are still advocating for more cuts in mobile data roaming, and are pondering an overhaul of the entire tariff structure for mobile services, MNOs face a daunting challenge for the future.”