Ready for reckoning: networks' new era

Ready for reckoning: networks' new era

Mobile networks are facing a defining moment in their history with flat revenues, a slowdown in smartphone sales and senior management changes signalling the dawn of a new era for the industry’s superpowers.


Following a difficult 18 months of mergers and acquisitions, three of the UK’s four major networks have changed their CEOs.

The past few weeks have also revealed the tough task that operators face with regard to revenue. Ofcom’s annual Communications Report showed once again that mobile revenues remained flat for the fifth year running. The regulator’s data reflected the quarterly financial statements of Vodafone and O2, which both showed that revenues were down.


‘This remains a brutally tough market’ said new O2 CEO Mark Evans at the brand’s most recent results. Evans has been bullish about continuing his predecessor Ronan Dunne’s mobile-first strategy, while many rivals have sought to diversify their offering with services such as broadbandand fixed line: ‘We’ve been challenged on the mobile-first strategy, but if customers are stillchoosing us above converged offers that are clearly supply led, then we still feel we’re hitting theneeds of those customers.


‘If we go back to the consolidation of BT and EE, their base has contracted over that period of time,we’re up against them as a combined unit – they have contracted by around 362,000 in the past fivequarters and we have grown. Two-thirds of the customers they’ve lost have gone to O2 over thatsame period.’


O2 attributed its flat revenues to the slowdown of the smartphone market, which has been anongoing concern for all networks. The industry’s two main players – Apple and Samsung – have both forecast that sales of handsets will continue to slow.


EE CEO Marc Allera told Mobile that it was a trend networks have been faced with for a number of years now: ‘Anyone that’s been following the market for the past three years would see that the handset market – particularly on the new acquisition side – has been dropping double digits year after year. There’s definitely a trend there, as customers are holding on to their devices a little bit longer. They’re less excited about the hardware that’s prompted them to switch and upgrade.


‘I think O2 is seeing what has been going on for about three years – it’s no surprise at all. I can’t see that trend reversing in the short term. The trend reflects what customers want. The most important thing is to ensure you’ve got the right products and propositions in your portfolio.’


On top of the challenges with revenue is the continuing investment in infrastructure, which all the networks have committed to. All four networks signed an agreement with the government to increase networks to 90% geographic coverage. There is also the matter of a £70m spectrum scheduled this autumn for the 2.3GHz and 3.4GHz bandwidths.

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If O2 want to increase their revenues then maybe they should do something about coverage. As a long standing and frustrated business user of O2 based ...
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