After a pretty bleak period bedeviled by recession and overly aggressive price competition, the third quarter at last brought some relief to the service provider community. TeleGeography’s analysis of the world’s 30 largest telcos shows that their aggregated Q3 revenues came in at USD309 billion, almost 3% ahead of the same quarter of 2009. That figure might sound unimpressive, but to put it in context, the similar figure for the preceding four quarters had been languishing at around 1%. Many of the world’s leading service providers would be ecstatic if they believed they could bank on 3% annual growth over the coming years.
There is one small fly in the ointment – the last two quarters have seen some aggressive M&A activity come to fruition, in particular courtesy of America Movil, Bharti Airtel and Deutsche Telekom/France Telecom/Everything Everywhere; stripping out the revenue impacts of the major deals, the underlying growth at the top 30 over the past year has been more like 2.2%. Even so, that is a reasonably strong bounce back for a mature telecoms market that has been through an extremely difficult period. Two more pieces of context are in order.
Firstly, over the last five years the global telecoms services market has been growing by an average annual rate of just over 5% (when measured in local currencies); over the next five years TeleGeography’s forecasts have been predicting that the average annual growth rate will be halved. The recovery seen among the largest operators in the third quarter is now helping to bring the market back in line with the ‘normal’ long term growth trend.
Secondly, for some time now telcos have been coveting the pay-TV market – determined to strengthen market position and to grow revenues by launching IPTV or other pay-TV services. Assessing a broader range of third quarter financial figures helps to explain that fixation. Over the last four quarters the revenue growth of leading cablecos has been three times higher than that achieved by the leading telcos, while growth among direct-to-home (DTH) service providers has outstripped both of those camps. Annual revenue growth at most leading DTH companies around the world has been 10% or more.
‘In many senses the market is now back on a more even keel’ said TeleGeography’s John Dinsdale. ‘The effects of the recession have not yet gone away but the worst is behind us, and you can say the same about aggressive price competition. Faced with plummeting ARPUs, service providers around the world are now focusing more on stabilizing revenue streams and less on winning subscribers at all costs. The effects of those actions can be seen in the Q3 revenue numbers and we’re anticipating a more stable market going forward’ he added.
TeleGeography’s GlobalComms Insight provides detailed subscriber and market forecasts for over 170 countries and is a companion to the GlobalComms Database, a regularly updated online database of wireline, wireless and broadband competition. No other telecoms market research service rivals their collective geographic scope and depth of coverage.
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