Regulation and competition biggest danger to operators, not recession

While some operators are claiming the economic downturn is the cause for their poor financial results (see T-Mobile‘s latest cries of pain), a study conducted by the market research firm Ovum claims increasing regulation and competition are the twin challenges mobile operators should focus upon.

Ovum maintains that, while it might be acceptable to worry about a recession-induced reduction in business travel and its impact on roaming revenues, the EU-mandated cut in roaming fees has had a far bigger impact on mobile operators' roaming revenues. The same applies to demands for lower mobile termination rates, new government taxes and spectrum liabilities.

However, Ovum's research did not show up any systemic decline in the number of revenue-generating customers (even in markets where migrant workers are leaving, customer numbers are still rising), it did note recession posed three key risks:

  • Fewer revenue-generating customers
  • Less revenue per customer
  • Lower value of generated revenues (from currency fluctuations).

While each of these could potentially undermine the mobile operator's business, currency fluctuation is the most dangerous as there is little operators can do about it. "Frustratingly, no matter how well an operator performs locally, if the value of its local currency falls compared to the US dollar or euro then the operator suffers. Keeping repayments on dollar- or euro-denominated loans becomes more costly and funding new network rollouts becomes very expensive."

For more on this story:
Ovum

Related stories:
Mobile broadband booming - but subscriber loyalty low
Recession to cut mobile entertainment growth by nearly $13 billion over next five years,
Recession to hit Nokia and Sony Ericsson sales - iPhone unaffected
Mobile phones mean more than shoes and chocolate to hard-pressed consumers

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