There has been an accelerated decline in telecoms revenue in Europe in 2013, according to research by the European Telecommunications Network Operators’ Association (ETNO).
The revenue fall is putting investment in next-generation networks by the largest operators at risk, according to the research seen by Financial Times.
Telecom service revenue across Europe is forecast to fall by 3.7 per cent in 2013, double the decline seen in 2012. Across major European countries, telecom service revenue will fall by €7.1 billion – almost 3 per cent.
The European telecoms industry has been affected by faltering economies in major mobile markets and a fall in traditional revenue streams, such as roaming charges, due to recent regulation. In addition, the shift to the higher speeds and prices of 4G networks has not yet boosted revenue significantly.
Many companies have been forced to reduce or suspend dividend payments in 2013 as they look to retain cash to cover debt.
Financial research firm Markit recently forecast that European operators, excluding Telefonica, will cut dividend payouts by 16 per cent in 2013. Telefonica recently resumed payments to shareholders after a one year break. The inclusion of Telefonica’s payouts would see a 12 per cent growth rate for the year.
ETNO warned that operators may not be able to invest in next-generation networks due to their weak financial performance. Europe is lagging behind in investment, “with a negative capex growth, compared to strong growth in US and Japan”, according to the research.
With regulation seen as a major cause of lower investment, ETNO is lobbying for a more favourable regulatory environment. The group is keen to make it easier for companies within countries to merge in order to strengthen their position.
ETNO chairman Luigi Gambardella said the report proves the EU telecoms sector will continue to lose revenue unless regulatory conditions improve, but added there are “positive signals” coming from Brussels.