The Myth Of Rising Telecoms Investment

Pretty much whenever quarterly reports are presented by telecommunication operators these days there is the usual note about the difficult situation they are facing due to the investment required to keep networks up to the rising data demand. But is this really the case? The 2012 report of the German telecom regulator (in English) has some interesting numbers on that.

In 2012, invest in fixed and wireless telecommunication networks in Germany was around 6 billion Euros. That's the combined sum of invest of all market players. Hast it risen in recent years? Not according to the report. In reality, invest has remained pretty much stable over several years and compared to the overall revenue in 2012 of around 58 billion Euros that seems a quite reasonable number, at least to me (see page 81 of the report).

Let's have a look at some more related numbers: While invest has remained stable, the number of employees in the telecom sector went down from 184.200 to 176.000 in Germany and the pressure can be felt. End customer prices might also have shrunken but I would argue that this was mostly compensated with higher use. This is reflected in a slight revenue decline from around 60 billion Euros in 2009 to 58 billion Euros in 2012. But when looking at the EBIDTA of Vodafone Germany which for 2012 was 3.359 billion Euros out of a revenue of 9.641 billion Euros then I don't really see big suffering.

2 thoughts on “The Myth Of Rising Telecoms Investment”

  1. If operators are not suffering, network suppliers are suffering big time. Nortel disappeared, Alcatel merged with Lucent, Nokia merged with Siemens and bought Motorola then bought Siemens stake in NSN. On the other side, some governments like Korea and China are investing heavily to build global network suppliers like Huawei, Zte and Samsung. Making telecom equipments seems to be very strategic for these countries as it was in the past in Europe. I hope that Europe will help to maintain at least 2 big telco supplier: Ericsson and …

  2. There would be a bigger market for suppliers if buying power was not concentrated in the hands of a few massive integrated telcos. We are due for another round of forced breakup and divestiture to bring the market and ecosystem back to a sustainable trajectory.

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