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Exploring Growth for Mobile Wholesale in Europe

Revenues for the European wholesale telecommunications market remained steady between 2010 and 2011, despite the economic downturn, intense competition, and regulatory actions.

According to the latest market study by Ovum, the European wholesale market was worth $48.4 billion in 2011, that's only 0.5 percent less than in 2010, representing 11 percent of the leading wholesalers' total European revenues.

Ovum's analysis of the size of the European wholesale telecoms market, based on the reported results of the 25 leading wholesalers, reveals a highly concentrated market.

In 2011 the top four wholesalers in Europe (BT, Deutsche Telekom, FT-Orange and Telefonica) accounted for over 50 percent of total European wholesale revenue, with the top 10 responsible for nearly 75percent of the total.

Yet almost all of the leading wholesalers in Europe experienced falling revenues from fixed voice. While some are mitigating the effect of this decline by broadening the attractiveness of their non-voice services, all of them need to do more.

"Wholesalers must lessen their dependence on traditional wholesale fixed voice sales by meeting customers' needs for non-voice services," said David James, principal analyst at Ovum.

Many carriers have already expanded their non-voice portfolios by offering emerging new services such as carrier Ethernet, content distribution, and hosting. However, according to Ovum's assessment, they must do more to attract and retain customers for their wholesale mobile and non-voice services.

Mobile wholesale is a growing sector in Europe and offers significant potential for upside opportunities based upon an increasingly diverse customer base, but it requires a more complete and flexible wholesale portfolio than capacity alone.

The fixed non-voice sector also offers greater opportunities for innovation and differentiation than voice services do.

Ovum found that a number of carriers, including Telecom Italia and French altnet SFR, did increase their revenues from other sectors to more than compensate for declines in fixed voice.

This wasn’t the case, however, for BT, the largest wholesaler in Europe by revenue, which saw its wholesale revenues decline from 2010 to 2011 as a direct result of falling fixed voice sales.

Only one of the leading players in the wholesale fixed voice sector – Belgacom – managed to increase its revenues from the sector, while all of the players in the wholesale non-voice sector experienced growing revenues.

"The decline in revenues from wholesale voice services shows no sign of relenting. Wholesalers must take action to understand and satisfy their customers’ developing requirements for non-voice services. This is particularly true for the few that dominate Europe's wholesale market," concludes James.

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