Reasons to be cheerful - cellcos could ride out recession almost unscathed
Published: 18 December, 2008
The drip-drip effect of bad economic news is creating a bleak picture of the year ahead in wireless, yet there are still some reasons to be cheerful, as two reports point out this week.
A new report from Wireless Intelligence reveals that mobile operators are among the best placed businesses to ride out the global financial crisis, despite vulnerability to currency fluctuations and the consumer spending slowdown, and will see similar growth rates in 2009 to those of 2008.
In a study of the 30 member countries of the OECD (Organization for Economic Co-operation and Development), WI forecasts that total revenues generated by mobile operators will grow by 4.5% this year to around €401bn ($584bn), and by a further 4.1% next year to €418bn.
Within this global picture, the US will to account for almost 30% of cellco revenue this year, up 6.7% to €116.5bn, AT&T, Verizon Wireless and T-Mobile USA all forecast to report double-digit revenue growth. The US is suffering a sharp downturn, but is expected to begin its recovery relatively early - before the end of 2009.
However, revenue growth at western European operators is less encouraging and is being depressed by decline in voice revenue, increased competition, currency fluctuations, and difficulties in meeting expectations for high speed services. In the UK, mobile revenues are forecast to decline by 6.4% in 2008 and grow by just 1.14% next year. Only France will see significant revenue growth, up 3.7% in 2008 and 4.5% in 2009. Boosted by eastern European growth, though, total revenues in the eurozone will increase by 2.6% in 2008 and 3.6% in 2009.
Wireless Intelligence also forecasts that earnings (EBITDA) at mobile operators in the OECD 30 will remain steady at about 30% of revenues in 2009, while operating free cashflow will also be stable at 15-20% of revenue. Capex will be broadly maintained at about 13% of revenue, but opex, currently 68%, will be cut back. Joss Gillet, a senior analyst at WI, said: "Managing costs will be the key challenge for the coming quarters, especially in mature markets. Mobile operators that decide to squeeze capex and drastically reduce opex should not dismiss the effect such decisions can have in the medium to long term."
WI is far less optimistic about the handset sector, though another research firm, ABI, sees hope in the smartphone end. It identifies this - along with video surveillance, telepresence, RFID, GPS and healthcare wireless networks - as the only likely exceptions to a general rule of downturn across the electronics sector in 2009. It predicts that the smartphone segment will continue to grow in 2009, though overall, the cellphone market will decline by about 5%.
More HANDSET News
More LTE News
More FINANCIAL News
COMMENTS
Carrier Broadband Performance: Africa & Middle East
Carriers are using mobile broadband as their weapon of choice in the fight against the commoditization of voice and falling ARPU. This...
Voice over LTE: Market Analysis and Forecasts
VoLTE offer unique advantages in lowering a carrier's voice infrastructure economics and promises to improve voice quality, device...
Satellite Phones: Will Dual Mode Help the Phoenix Rise from the Ashes?
Satellite phones have followed an arduous path since their much-hyped launch more than a decade ago. The hype was followed by an e...
