Euro telcos must consolidate or collapse, warns Fitch
The European carrier sector is “overcrowded” and must brace for extensive consolidation over the next 24 months, according to a new report from Fitch Ratings.
The half-yearly review of the sector claims that Europe’s more mature mobile markets such as the UK, Germany and Spain have too may carriers and all face the mounting pressures of price erosion, regulatory pressure and the effects of poor economic outlook.
“The recession has brought into stark relief the fact that these markets have too many operators and that consolidation is needed, particularly in the mobile sector,” Fitch Ratings analysts said.
German and UK operators felt the brunt of these trends in Q1, where carriers with strong emerging markets portfolios – such as Vodafone and Telefonica – reported stronger than average growth, Fitch said.
“The days of robust mobile and fixed broadband subscription growth are over. With competition continuing at these high levels, there is a real possibility that any uplift from new revenue drivers such as mobile data or bundled content may end up just being competed away.”
It warned that if consolidation does not occur, potential new revenue and margin growth services such as mobile data may be eroded by competition in a bid to retain existing customers.