Both domestic and international European wholesale revenues fell between 2008 and 2009, in both the voice and non-voice markets, according to the top 24 operators' 2009 financial results.The region's wholesalers should re-evaluate the effectiveness of their business models in light of these declines.
European wholesale revenues declined at a slightly faster rate than total wholesale revenues.
The European wholesale market was worth more than $48.8 billion in 2009, down 9.8% year-on-year. The total wholesale revenues of the 24 telcos that we studied declined by 7.8% between 2008 and 2009; their European retail revenues declined by 8.4%; and their total revenues declined by 3.9%.
European wholesale voice revenues in 2009 reached $23.3 billion, while wholesale revenues from all non-voice services totaled $25.5 billion. In our previous analysis (2007–08) voice represented 60% of total European wholesale revenues, while in this analysis voice revenues were only 48% of the total.
This is the first time that European wholesale voice revenues have been exceeded by non-voice revenues. We expect that this difference will grow in the coming years as wholesale voice prices continue to fall and wholesalers increase their data service portfolios.
We found that 17 carriers with a European domestic arm have decreased their dependence on voice services in their domestic wholesale markets.
Both BT and Telecom Italia saw their European wholesale market shares fall in 2009 even though they held onto their number 1 and 3 rankings in terms of total European market share. BT was the only player that held significant share in all wholesale markets, except for international voice.
France Telecom held significant market share in both domestic wholesale voice and non-voice markets, while Deutsche Telekom and Telecom Italia held significant market shares in one wholesale market (domestic voice and international voice, respectively).
In the European international wholesale market, players’ reliance on revenues from wholesaling voice services also fell between 2008 and 2009.
Over the past few years, there has been a lot of noise made around international non-voice service launches and network upgrades to deliver these new solutions. There is much greater opportunity for innovation and differentiation in the non-voice arena than there is in voice.
Many carriers have already expanded their non-voice services portfolios. Now it is time to push them even further. This is particularly important in the European international wholesale market, where competition is intense and prices are expected to fall further as the impact of VoIP increases.
However, we believe carriers struggle to estimate the real demand for these more profitable non-voice segments. It is essential that players ensure their portfolios of international wholesale non-voice services match their customers’ needs.
Carriers need to be more attentive to their customers’ changing requirements, responding with more innovative and imaginative non-voice services and service packaging.
The wholesale market continues to present valuable opportunities for carriers to earn additional revenues. Retail business lost to competitors can still bring in revenues through the provision of wholesale services to the contract winner. It is important to assess your market to find new opportunities and possibly deploy new services.
Carriers should look for new niche markets where they can appeal to new customer segments. These niche markets may require customized solutions and customer services that carriers can develop to differentiate themselves from their competitors.
However, new customer segments and demands are always appearing – only the most attentive, flexible, and nimble wholesalers will be fast enough to exploit these new opportunities.