THE WRAP: Smartphones fuel carrier earnings; CDMA iPhone heading for China

Smartphones stood front and center this week, fueling 2Q earnings at carriers across the globe and retail sales in Europe’s big-five markets, but analysts and regulators warned of the impact the devices can have on data networks and even personal relationships.
 
Deutsche Telekom was the latest European carrier to report growing mobile data income as a result of higher smartphone sales during the second quarter. Even its struggling T-Mobile USA business saw the benefits of the devices, however the higher smartphone sales couldn’t help the firm grow profit, which fell 26.7% year-on-year.
 
The German incumbent was riding a wave of growing smartphone penetration across Europe’s big-five markets that fueled an 80% rise in the number of consumers accessing online retail sites from their smart devices, comScore revealed. Overall mobile access to such sites hit 13.5 million in the three months to end-May.
 
Higher sales of smartphones also powered a 30% rise in Hutchison Telecommunications’ mobile data revenues in Hong Kong and Macau during 2Q. The operator grew overall profit 37% to HK$494 million (€44.7 million).
 
Across the water in South Korea, incumbent SK Telecom stated it is on-track to sign up ten million smartphone customers in 2011 after hitting 7.5 million subscribers by end-June. The high-spending users helped the firm to a marginal rise in EBITDA margin to 31.3% during the period, as overall profit grew 3.7% to 465.4 billion won (€307 million).
 
The connection between higher smartphone sales and data earnings is good news for China Telecom, which is reportedly set to launch a CDMA version of Apple’s iPhone in the back half of the year.
 
Despite the benefit to carrier’s balance sheets, there is a darker side to smartphones Research by UK regulator Ofcom found 37% of adults and 60% of teenagers are addicted to their device, and that total penetration now stands at 27%.
 
 
Meanwhile, Juniper Research cautioned that operators must increase their use of mobile data offload technologies including Wi-Fi and Femtocells to offset predicted rises in data delivery costs from $53 billion (€37.4 billion) in 2010 to $370 billion in 2016.
 
The forecasts are bad news for mobile operators, particularly as fresh figures from TeleGeography revealed trans-Pacific wholesale circuit prices have plummeted in the past two years thanks to new competition.
 
In India, Bharti Airtel recorded its sixth straight quarter of lower profit during 2Q. Net profit fell 27.8% to $272 million (€192 million) as the cost of acquisitions in Africa and domestic 3G investments took their toll.
 
A second consecutive quarter of above 30% growth in software sales left SAP Asia Pacific Japan confident of hitting full year targets of non-IFRS operating profit of $6.34 billion (€4.4 billion) to $6.62 billion.
 
And the UK government approved reforms to its ageing copyright laws that could net the country an additional £7.9 billion (€9 billion) by freeing up access to scientific research data and orphaned works of literature and art. The move will also legalize the transfer of music between multiple devices.

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