EU telecoms must stabilize further

Telecoms businesses in EMEA must do more to convince ratings agency Moody’s Investors Service the industry is back on track.
The firm refuses to change its negative rating on the EMEA telecoms service sector, despite predicting revenues in the market will stabilize, or decline a marginal 0.5%, in 2014. Carlos Winzer, a senior vice president in Moody’s Corporate Finance group, says the firm will maintain its rating until the industry shows its recovery is sustainable.
“We have had a negative outlook on the sector since November 2011 and would expect to see a predictable and sustainable 1% to 3% annual revenue growth to make it stable,” Winzer explains in a report.
The firm predicts continued declines in prices in the most competitive markets in the region, and tips incumbents including Deutsche Telekom, Orange, KPN, Telefonica, and Portugal Telecom will prosper due to offering bundled services. However, the firm does not predict a wave of cross border consolidation in the coming year, noting that large incumbents are either selling assets, or have little flexibility to engage in mergers and acquisitions.
Moody’s tips Russia’s top three mobile operators, MegaFon, MTS and VimpelCom, to continue a run of single-digit revenue growth through 2014. The market is one of three – South Africa and the Middle East – the firm rates as more stable than Europe.