Mobile operators face an uphill task in southern Europe, where weak economies and regulation are placing pressure on voice revenues, Fitch Ratings reveals.
The firm notes service revenues in the region’s southern states fell 5.4% in the year to end-March, as lower consumer spending clashes head on with regulator’s efforts to cut mobile termination rates to bring them inline with EC statutes. The cut in termination rates is hitting the south harder as costs are typically higher than in northern states, the firm reveals in an e-mailed research note.
Northern states are less affected by a general decline in voice income as mobile data revenues begin to take up the slack. The firm notes that mobile service revenue turned positive across northern Europe during 2010, with Germany and the UK now offsetting lower voice revenue with non-voice services.
However, the firm is cautious on operator’s reliance on SMS for non-voice revenue, noting the service faces risk in the medium term from instant messaging and social networks. The ratings agency believes the threat will grow as voice over IP become prevalent, and social networks begin to appeal to a broader age group beyond the youth segment that dominates the services today.