European operator margins continue to slide, but worst is over, claims study

The European downturn in consumer spending continued to impact mobile operator margins in Q2/09, according to a new report from Strategy Analytics. The market research firm claimed that operator EBITDA fell by three per cent in Q2/09, which provided a spark of optimism given that a five per cent decline was registered in Q1/09.

"Over half of the European mobile operators saw EBITDA fall in Q2," said Phil Kendall, director of wireless network strategies. "However, this region is starting to reap the benefit of cost-cutting measures introduced to cope with lower customer spend during the recession."

While European operators struggle to improve their profits, service providers outside of this region recorded a four per cent growth in EBITDA in Q2/09, which Strategy Analytics believes might signal that the worst of the recession is over.

The firm, which tracks over 180 mobile operators worldwide, summarised its findings by stating that:-

  • EBITDA grew in all regions outside Europe and registered a two per cent annual increase globally.
  • Service revenues also registered two per cent annual growth, but were down significantly from the six per cent growth seen in Q2/08.
  • Gross subscriber additions were up 11 per cent - attributed more to rising churn than rising subscriber growth.

Also of interest was the dramatic fall in operator Capex of 13 per cent in Q2/09, which Strategy Analytics maintained was caused by operators cutting back during this period of economic uncertainty.

This drop in Q2/09 Capex, while lower than that reported in Q2/08, might come under further pressure given the merger of T-Mobile and Orange in the UK, and heightened speculation that operator consolidation is increasingly likely in the US.

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