Mobile operators are resiliently beating the recession
Published on: 28th Apr 2009
Note -- this news article is more than a year old.
According to the findings of a new report from Ovum, mobile operators are comfortably and steadily beating the recession. Overall, operators maintained revenue and customer growth during the period, but the rate of growth is down. While most operators in emerging markets are yet to see any significant pressures on their performance, operators in countries such as the US and across Europe, where the recession has had dramatic impact, operators' revenues are holding out.
Indeed, it is not about immunity from the recession per se, but rather, adaptability to the downturn.
"It is comforting that mobile operators have shown remarkable resilience", says Emeka Obiodu, senior analyst at Ovum and lead author of the report. "Whereas other industries have gone to the government with their begging bowls, mobile operators are actually pledging to invest billions to roll out a new high speed mobile network. In fact, after scouring the world, we are yet to find any mobile operator that is calamitously struggling solely because of the recession."
The report projected the three key mechanisms of how the recession affects mobile operators:
- The threat to the number of revenue generating customers has yet to materialize as operators are generally still growing and adding customers.
- While the fear that existing customers will reduce their spending is valid, mobile operators have taken steps to avoid or ameliorate drastic impact.
- The biggest threat to mobile operators is that currency fluctuations reduces the value of the revenue they get. Lower value means it is difficult to maintain repayment on dollar or euro denominated debts and to fund new network investment.
The report warns that going forward mobile operators have to get back to worrying about competition and regulation, as these are the main challenges facing them. "It is no use bickering about the recession when rivals are positioning themselves to outsmart you. Neither is it savvy to fret about the fall in roaming revenues from business travellers when the EU can force roaming prices down easily", says Obiodu. "On many occasions where an operator has complained about the recession, it is possible to show a corresponding non-recessionary force at play."
However, Obiodu warns that the recession will force a change in future direction for operators. "While the short term impact is limited, the recession will ultimately engineer a paradigm shift in strategic thinking across the industry. On the ground, the basics of the industry will surely remain the same, but the approach to service delivery will eventually change."