A roundup of Q1/09 financial results from European mobile operators would indicate the economic downturn is not hitting this sector hard, as against other industries such as car manufacturing and retail.
Most industry analysts agree mobile service revenues in Europe did suffer falls in Q1/09, but only by 1.9 per cent compared with Q4/08 which recorded a 1.5 per cent growth in service revenues. Interestingly, operators in Northern Europe faired the best with France, the Netherlands and Finland rebounding, with the UK and Germany slowing only moderately. However, Greece, Spain, Ireland and Portugal recorded service revenue declines ranging between 3 and 7 per cent.
For a company that once set the agenda for mobile telephony, Vodafone continues to underperform when measured against its major competitors--O2 Telefonica and Orange--and smaller operators. Analysts at Credit Suisse believe Vodafone has suffered from the lack of the iPhone (and seems likely not to have gained exclusivity to the Palm Pre) and has lost its creative and innovative flare.
Of concern to mobile operators, and it certainly has the attention of Vodafone's CEO, is cutting costs within their own organisation--whether it be Opex or Capex. Disturbingly, Credit Suisse has reported Q1/09 Capex increased to nearly 9 per cent, up from 8 per cent in Q1/08--the biggest year-on-year increase in this metric for a while. Analysts were unsure if this worrying trend had been caused by investments in backhaul and/or HSDPA, or just a change in seasonality.
Albeit that European unemployment will continue to rise and harsh economic conditions will continue, these results for the mobile industry are far from disappointing. While there will be "bumps in the road" ahead, there is the chance this industry could survive this worldwide turmoil relatively unscathed. -Paul