T-Mobile, Orange Experience Higher Customer Retention Costs

Boston, MA - April 12, 2011 – In Q4 2010, as the world’s mobile operators built on their post-recession recoveries, the Western European market recorded further revenue losses and EBITDA erosion, according to new research from Strategy Analytics. Based on date from the most recent quarterly benchmark, "Western Europe's Mobile Market Still Searching for Growth, OPEX Management a Concern," which comes from the Wireless Operator Strategies (WOS) of Strategy Analytics, gains in operating expenditure (OPEX) made in the first half of 2010 were reversed by year-end.

This Wireless Operator Strategies (WOS) research, which tracks the operational and financial performance of over 200 mobile operators who account for over 77 percent of global subscribers, found that mobile service revenues fell by 1.3% in Q4 2010 in Western Europe, a deterioration on the Q3 rate of decline. Meanwhile, mobile operators worldwide saw revenue grew by 6.1%. Western Europe Mobile EBITDA also fell back in the second half of 2010, with an accelerating rate of decline after good OPEX gains in the first half of the year.

"This weak performance is less about the after-shocks of the global recession and more about the changing data-centric market environment. Subsidies associated with smartphone sales and upgrades, and the relentless growth in data traffic from these devices, reversed the long-term trend of falling OPEX per subscriber," comments report author, Phil Kendall, Director, Wireless Operator Strategies. He continued, "For example, the average cost to retain a customer has increased for T-Mobile in several countries: Germany (26%), Austria (57%) and the Netherlands (12%). Orange customer retention costs have increased in France (11%) and Spain (14%)."

Sue Rudd, Director, Service Provider Analysis (SPA) at Strategy Analytics, adds "Matching new data service revenues with efficient operations and capacity utilization must become a major focus for mobile operators who are looking to enhance EBITDA and slow the increase in OPEX. Operators cannot pick and choose their areas of focus anymore. Operators must optimize pricing, service revenues and costs."