Study: Why some operators achieve 10% revenue growth and others only 2.7%

Becoming a successful mobile operator is no easy feat, and a new study from Ericsson and Ernst and Young (EY) claims that so-called "frontrunners" in this field adopt three distinct strategies that enable them to enjoy significantly higher growth than rivals.

Although the study does not identify operators by name, it said frontrunner operator revenues increased by a CAGR of 9.6 per cent between 2010 and 2014 while competitors in their markets achieved only 2.7 per cent growth. What's more, markets without frontrunners contract by 1.4 per cent. The study added that the number of frontrunners increased to around 20 in 2014, and predicts this number will rise to 30 or more in 2015.

Successful operators typically focus on network performance, quickly adapt to market conditions and are also first to market with new products and services as they seek to address issues such as rising data usage and the growing pressure on more traditional revenues.

"We clearly see that despite their different strategies, frontrunner operators share a common commitment to network quality. Not surprisingly, frontrunners constantly seek new ways of challenging industry conventions to make connectivity more relevant to people, business and society," said Martin Sebelius, executive director of Nordic advisory at EY.

It may not sound like rocket science, but the report notes that some operators have clearly been more successful at evolving their networks and their business models to meet new challenges than others.

The study also revealed a number of ways in which frontrunners are similar, including their views on connectivity and services as differentiators rather than commodities, and their focus on innovating new revenue streams rather than maximising old ones.

"Frontrunners display greater interaction between marketing and technical roles, rather than the traditional silos, and they leverage network performance by either utilising superior network performance as a differentiator or by improving network performance to meet customer expectations," the report observed.

Interestingly, frontrunners are not necessarily market share leaders in their respective regions, and in fact most were ranked third. However, frontrunners will be more evenly spread across the top three market share positions in 2015, the study said.

For more:
- see this Ericsson and EY release

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