EuroWire March 2016

Transatlantic cable

Network investments, high-bandwidth data, and business services promise to o set some of this pressure. Carriers may reconsider investment in data centres following Windstream’s sale of its data centre business and CenturyLink’s strategic review. The consolidation of bre assets could slow as the number of potential targets shrinks. Europe † Revenue growth for the European telecom industry in 2016 will depend largely on ability to stimulate and monetise demand for data amid a tepid economic recovery and regulatory uncertainty. Fixed-mobile convergence will set the tone of competition, with varying levels of promotional activity across countries. Potential consolidation in Italy and the UK, even with stricter remedy requirements, supports pricing power. Capital spending will moderate as 4G networks near completion. † This year is expected to mark an in ection point for the European telecom industry, with the consensus favouring a return to revenue growth for the rst time since 2009. Progress in 4G population coverage, which reached an average 75 per cent in western Europe in third-quarter 2015, will further aid revenue this year, potentially driving industry expansion. The GSMA forecasts one per cent growth in mobile revenue over the period 2017-2020. At less than 20 per cent, adoption of 4G remains relatively low. Take-up of 4G may accelerate in 2016 as smartphone prices decline and marketing e orts increase. According to the market research rm IDC, smartphone prices fell 12 per cent in the rst nine months of 2015.

subscribers with a detailed analysis of the short-term outlook for North American and European telecom carriers. Here, abridged and lightly edited, are the main points made by Bloomberg analysts John Butler, Matthew Kanterman, Joshua Yatskowitz and Erhan Gurses in “Global Communications 2016.” North America † The USA wireless market is likely to remain highly competitive this year. In Canada, spectrum auctions, wireline stabilisation, and the sluggish economy will probably be the main concerns. Mobile content is an emerging theme as carriers seek growth through new services. † A price war is poised to enter its third year in the USA, with T-Mobile and Sprint slashing prices in a bid to take market share from AT&T and Verizon. The potential entry of cable companies into the wireless market will only add to this pressure, likely weighing on revenue growth and margins. † Spectrum – essential to all wireless networks for over-the-air transmission of analogue and digital signals including voice, video and data – is the most precious asset in wireless. The value of spectrum in the latest US Federal Communications Commission (FCC) auction rose signi cantly above prior auctions and the secondary market, underscoring the need for more of this resource. With the pending auction of 600 MHz licences in rst-quarter 2016, spectrum scarcity will likely remain a key industry theme. † Incumbent wireline carriers’ signi cant exposure to legacy voice and low-bandwidth data services will further impact their revenue growth and margins this year.

51

www.read-eurowire.com

March 2016