Europe's wholesale telecoms market remains stable, reports Ovum

Despite the economic downturn, intense competition, and regulatory actions, revenues for the European wholesale telecoms market remained steady between 2010 and 2011, according to research firm Ovum. In the firm’s annual analysis of the size of the European wholesale market it revealed that the market was worth $48.4bn in 2011, just 0.5 per cent less than in 2010. This represents 11 per cent of the leading wholesalers’ total European revenues.

The analysis was based on the reported results of the 25 leading wholesalers. Almost all of the leading wholesalers in Europe experienced falling revenues from fixed voice, reported Ovum. 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, according to David James, principal wholesale telecoms analyst at Ovum.

“Wholesalers must lessen their dependence on traditional wholesale fixed voice sales by meeting customers’ needs for non-voice services,” he said. “Many carriers have already expanded their non-voice portfolios by offering emerging new services such as carrier Ethernet, content distribution, and hosting. However, they must do more to attract and retain customers for their wholesale mobile and non-voice services.”

Mobile wholesale, a growing sector in Europe, offers significant potential for growth based on an increasingly diverse customer base, reported Ovum. However, 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 France’s 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. The firm 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.

James added that the decline in revenues from wholesale voice services shows no sign of relenting, so wholesalers must take action to understand and satisfy their customers’ developing requirements for non-voice services.

Ovum’s analysis also revealed that the European wholesale market is a highly concentrated one. In 2011 Europe’s top four: BT, Deutsche Telekom, FT-Orange and Telefonica, accounted for over 50 per cent of total European wholesale revenue, with the top ten responsible for nearly 75 per cent of the total.