FEATURE INDUSTRY OUTLOOK
Some markets, developed
and emerging alike, are
characterised by a surfeit
of carriers, and further
consolidation among
operators in 2008 would
not come as a surprise
26
Top ten global increases in annual blended ARPU, 2Q07
Rank Operator Monthly ARPU (US$) Annual change
1 Telekom Malaysia 18.81 42.28
2 VimpelCom 9.90 33.78
3 SingTel Mobile 44.17 25.34
4 Mobile TeleSystems 9.20 22.67
5 Turkcell 14.10 12.80
6 MTC 71.00 12.70
7 TeliaSonera 40.45 11.77
8 Etisalat 40.00 8.11
9 KPN 39.10 7.30
10 Telefonica O2 44.22 6.68
As a result, continued cost cutting will
likely be another theme of 2008. Principal
among cost management strategies is network
outsourcing, an option that is growing in its
appeal to operators. Where once they might
have felt that the network was their greatest
asset, and that control over it was therefore
essential, carriers are now beginning to view
that asset in terms of its cost.
This dovetails nicely with the problems being
faced by a vendor community struggling
to sell into developed markets where growth
may be in the low single digits. As their kit
sales slow down, they’re looking for their own
new revenue streams and we can expect to see
more operators unload their networks—and
the staff that maintain them—onto willing
vendor partners. Network sharing deals in all
markets are likely to grow in number, too.
Some markets, developed and emerging alike,
are characterised by a surfeit of carriers, and
further consolidation among operators in 2008
would not come as a surprise. In developing
markets, licence issue has been abused as a
short term revenue generator for the state—as
in the Cote D’Ivoire, a market of less than 20
million people served by seven operators.
Even in Austria, where penetration is in
excess of 100 per cent and there are four
operators, Boris Nemsic feels that the market
is over-crowded. The growth in the number of
MVNO operators serves only to exacerbate
the situation and, state regulatory policies
permitting, a number of smaller operators
are likely to be swallowed up in 2008.
It is also highly likely that we will see further
consolidation on the supply side. 2007 has been
a difficult year for all of the Western vendors
(see p40) and the positions of those players
which have yet to indulge in high level M&A
activity—Motorola, Nortel, Ericsson—are by no
Note: Rankings take into account world’s 30 largest listed operator groups only
means secure. Further mergers could well be in
the offing, although the performance thus far
of companies born out of such activity offers
no guarantees of success.
Of course, carriers will also look to improve
their revenues through the development and
commercialisation of new services. But 2007
set the stage for a more challenging 2008 in this
regard. For the past four or five years, operators
have looked to be winning the battle to lead
the service value chain by steering customers
mostly towards their own services.
But with a resurgent services strategy from
Nokia in the form of its Ovi portal—which
will doubtless be enhanced by both recent
and further acquisitions—and the concerted
efforts of internet players like Google and
Yahoo, the carrier community has a fight on
its hands. Moreover, it’s not altogether clear
that it stands a solid chance of winning.
Just as operators have adopted a pragmatic
approach to flat rate pricing, it seems that
they are prepared to be more realistic about
services, too, as they move into 2008. Of the
operators polled by ITM, 48 per cent said they
would prefer to partner with Google and share
revenue. A further 44 per cent suggested that a
completely open internet strategy was the best
way forward, with end users free to discover
whatever content and services they could find.
Only eight per cent indicated an intention to
develop their own search function independent
of the big online players and this number will
probably dwindle as 2008 unfolds.
Global mobile penetration hit 50 per cent
as 2007 drew to a close (see p42), so the unconnected
citizens of the world number in
the billions. And as operators in developed
territories develop strategies to cope with
saturation, much growth potential remains
in emerging markets. >>
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