Thursday, July 12, 2001

European Mobile Operators Have Cause for Optimism

Europe's mobile operators are continuing to achieve solid results on some critical performance benchmarks like average revenue per user (ARPU), minutes of use (MOU), subscriber churn, and mobile messaging services. This is one of the key conclusions from a new Yankee Group Report, "Mobile Operator Health Check: The Vital Signs Are Stable."

The study assessed the recent operational and financial performance of the region's leading mobile operators, and it provided plenty of cause for optimism in an otherwise depressed telecommunications marketplace.

Commenting on the findings, Declan Lonergan, director of wireless research and consulting at the Yankee Group Europe, stressed the significance of the results: "Market sentiment toward most technology and telecommunications companies has deteriorated dramatically over the past 12–18 months. In this difficult market context, we were generally pleased with the operational performance of Europe's mobile operators since the beginning of 2000. We found that, on average, ARPU and MOU are still falling (by 13% and 4%, respectively, between 1999 and 2000), but the rate of decline was pretty much in line with our expectations. There is also a growing number of players whose ARPU has now started to increase. Customer churn, at 18% per annum, does now appear to be under control, though there are some notable exceptions. Perhaps most significantly, the increase in the use of mobile messaging continues to compensate for the erosion of voice ARPU. We found that, on average, non-voice services accounted for 7% of service revenues in 2000, representing a solid increase from the 1999 level of 4%. For some operators the figure for 2000 was over 10%."

Focusing on the long-term challenges faced by the operators, Lonergan added: "Clearly, these companies still have a lot of issues to resolve, particularly with regard to the heavy debt burden that most are now carrying. However, we feel confident that if they can navigate a way through that particular minefield, most should be assured a healthy future."