Networks continue to feel the squeeze on revenues

Networks continue to feel the squeeze on revenues


The third quarter results for network operators Orange, T-Mobile and Vodafone are something of a mixed bag. Is there anything to be gleaned from them in the way of green shoots? The answer seems to be, not a great deal as yet. All three posted a decline in revenue and pointed the finger of blame at recent caps on roaming charges and a cut in mobile termination rates to partially explain the fall.  

The effects of the recession, regulatory changes and continued fierce pricing competition for voice and broadband customers indicates that they won’t find much joy here to boost their revenues in the near future. Times will continue to be tough.

T-Mobile’s parent, Deutsche Telekom, and Vodafone clearly think so, as both have said that cost-cutting measures will continue. This may not be as painful as it sounds, as in Vodafone’s case much of the savings will come on the technology side, rather than people.

So, after the cost-cutting, where is the revenue growth going to come from? The extension of the smartphone into the mid-range market will help drive data revenues. But it’s a relatively short-term game, as data is already a highly competitive field. Convergence services in the b2b market is another growth area, but the real strength is likely to be in the embedded mobile, or m2m market. It’s a very fragmented and immature market, but the possible applications across a wide range of sectors are immense.

The business case still has to be proven in some sectors, but it’s already working in transport. The networks are, of course, well aware of the potential. But tariffs are relatively expensive for m2m. If the networks cut their tariffs and helped kick start the m2m market they should benefit from a whole new revenue stream.

Written by Mobile Today
Mobile Today


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