A new study of the world's leading mobile operators ,from Wireless Intelligence, has them ranked by revenue, as against total customer numbers. This might seem unfair on some of the large emerging market operators, such as the Bharti Airtel Group, but a few high-usage smartphone subscribers seemingly count for more than several hundred feature phone users.
The ratio between revenues and customer numbers is telling. China mobile, which ranks No. 1 with revenues of $19.9 billion (€13.92 billion) in the fourth quarter of 2010, recorded 580 million customers.
Vodafone, the No. 2 operator, reported fourth-quarter revenues of $15.2 billion (€10.6 billion), and yet had only 353 million customers, or 40 per cent fewer customers than China Mobile, but only 25 per cent less revenue.
While the mobile industry is transfixed by "economies of scale" and the "business eco-system," I'm not sure this is currently working in the favour of China Mobile or Bharti Airtel--which reported revenues of $2.9 billion (€2.02 billion) in the fourth quarter with a customer base very close to 200 million.
While the report draws no conclusion to this disparity, it does point to China Mobile, Bharti Airtel and other operators principally focused on emerging regions as suffering from intense competition in highly price-sensitive prepaid markets. Contrast this to operators in Japan and South Korea, which scored high in revenue terms despite having significantly fewer customers than most others in the ranking.
So, while operators in mature markets complain loudly about increasing interference from regulators, fierce competition and increased customer subsidies to reduce churn, they manage to remain the most profitable.
But can this continue? The answer is probably yes, for the foreseeable future, anyway.
Those operators that work in these more established markets have become adept at maximising their revenues from sources other than voice and basic text messaging. Data revenues are now critical as these larger operators push forward into new segments where regulation and price sensitivity is less harsh, and consumer appetite remains keen.
Vodafone's decision to sell its minority holdings in China Mobile, France's SFR and Poland's Polkomtel is an example of focusing on where the company can obtain profitable revenues. We should expect to see France Telecom Orange, and perhaps Telefónica O2, begin to follow this move as they also come under pressure from their major shareholders (their respective governments) to produce better results.--Paul