European telecoms investments are rising to new peaks

Strategy consultants Arthur D. Little in joint cooperation with Exane BNP Paribas have published the report „Capex – the long march“, the 13th version of their annual report on the European telecoms industry. This report foresees revenue decline for European telecoms operators (-1.6% 2013-2016e CAGR), with a contraction in mobile and growth in fixed broadband. Bertrand Grau, Principal in the Paris office of Arthur D. Little: “We believe that despite the planned decline in revenue, telecom capex will continue to rise, driven by new network deployments and fostered by increased competition by cable and mobile leaders. This will drive consolidation of the market”. In mobile, there are genuine differences in quality between different networks. So far the companies having better networks have in most cases not been able to reap better prices or market share gains from them. Still, leading operators will step up their efforts on network quality, and this will put the financial equation of challengers under pressure. This will lead to a regrouping of networks but not necessarily to a decline in competition. In fixed-line, investment will eventually pay off. Cable operators will continue to extend their lead and it will cost non-cable incumbents more than currently expected to stay in the race. “Incumbents face another 20% step-up in fixed-line capex over the 10 years, on top of what has already been committed” added Antoine Pradayrol of Exane BNP Paribas. Fixed broadband altnets will be caught between a rock and a hard place and the authors also expect to see more consolidation and shifts to wholesale approaches. Overall, the future of networks is the combination of “virtualization” + “patchworks”, to bring benefits in terms of costs and simplicity, but also to facilitate the interface with other networks and players in the ecosystem, and thereby open up new sources of revenue.
This report capitalizes on the analysis of 118 interviews with leading industry players in 24 countries on their views of the challenges in the industry.
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Notes for Editors

Founded in 1886, Arthur D. Little is the world’s first management consulting firm, linking strategy, technology and innovation to offer its clients sustainable solutions to their most complex business problems. Arthur D. Little has a collaborative client engagement style, exceptional people and a firm-wide commitment to quality and integrity. Arthur D. Little has 26 offices worldwide and serves many of the Fortune 100 companies globally, in addition to many other leading firms and public sector organizations. Under the Exane BNP Paribas brand created in 2004 following the partnership signed with BNP Paribas, the Exane Group offers research, sales and execution on European equities to institutional investors. With more than 630 European stocks covered, 115 analysts and 90 sales and sales-traders, Exane BNP Paribas has the critical size and reknown expertise in cash equities and intends to continue to invest in this business. Exane BNP Paribas currently serves more than 1200 institutional clients around the world through 9 offices (Paris, London, Geneva, Frankfurt, Milan, New-York, Madrid, Stockholm and Singapore). Its teams and research are praised for their expertise and are regularly awarded (in the 2013 Extel survey, Exane BNP Paribas ranked N°4 on European sector research).
Founded in 1990, Exane is an investment firm focused on European equities. The Group has three  core businesses: Cash Equities, Equity Derivatives and Asset Management.
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Further Information


Isabelle Tisserant
Arthur D. Little
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