Annual Economic Report

At the level of ETNO, the situation is slightly more optimistic insofar as its members, incumbent operators on their respective domestic markets, have often taken up positions in alternative operators abroad as part of their internationalization. Overall, their share of the sector’s total revenue is about 60%. They also provide 63% of the investment made in networks and telecommunication services in Europe and account for almost 72% of the activity of operators of all origins.
…and operators face increasing challenges within the digital ecosystem
In more general terms, operators’ standing is measured in relation to what is now referred to as the digital ecosystem, which itself has also been in a state of upheaval, in particular since the early 2000s insofar as value has shifted both downstream towards content provision and upstream towards intelligent equipment and nowadays above all in terminals. Operators find themselves in the midst of these developments, under pressure with respect to their own growth. After a long period of continuous growth, their revenue has begun to fall since 2009; for the first time last year, there was a slowdown in revenue from mobile services throughout Europe. Operators’ capitalization is shrinking just as Google’s, or more strikingly Apple’s, is soaring. In September 2012, the consolidated market value of the five largest European incumbent operators is not even a third of Apple’s
value!
Drivers of change among others
Among all the factors that have transformed the telecommunications landscape in the last 20 years, quite a few others could also have been mentioned. Regulation is indisputably one of them, owing to the growing importance of the authorities of the Commission and national regulators. The economic climate is also another, which of course partially explains why the sector has been in a slump in recent years, over and above the structural factors mentioned earlier. Mention could also have been made, half way through these two decades, of the «reprehensible exuberance»
of operators that got carried away with the dot.com bubble and became involved in committing huge sums to activities promising grossly overestimated rewards. Nowadays, it is financing the NGAN , needed to meet the boom in traffic, which raises a number of questions concerning the development of business models to enable European industry to regain the initiative. All these factors merely serve to highlight further the challenges faced by operators throughout this period and those they must still face today such as how to achieve a return to growth and to continue to invest in an increasingly restrictive environment?