10 Years of Telecom Competition Conference –

Wireless growing rapidly in European market, telecom conference is told Just two wireless companies have been able to establish themselves as major players in the European market, despite a rash of mergers and acquisitions, a telecom conference in Toronto earlier this month was told. That was one of the many surprising findings at the Celebrating 10 Years of Telecom Competition in Canada conference held June 11-12. Frédéric Beauvais of A.T. Kearney Inc.’s communications & high tech group was one of two speakers at the View From Europe session at the conference. The Paris consulting firms’ executive explained that in most countries the market is split between Vodafone and Orange. The voice market, both wireless and wireline (or fixed), is the largest segment of the European business, but data is expected to grow. Growth is projected to be at the expense of wired voice lines, rather than wireless. Beauvais presented figures showing wireless voice represented 27 per cent of the western European market in 2000, a number that is expected to edge up to 28 per cent by 2005. But the wireless data sector will jump from two per cent to seven per cent over the same period. Similarly, wireline market share will climb from eight per cent to 14 per cent of the market. By contrast, the voice portion of the market will fall from 57 per cent to 45 per cent. He also demonstrated that the market is expanding rapidly in western Europe. Wireless penetration is projected to soar to 77 per cent in 2004 from 40 per cent in 1999. Fixed lines, on the other hand, are expected to move only slightly to 65 per cent two years from now from 56 per cent in 1999. While wireline will continue to hold the major share of revenues for European telcos, the percentage will drop as wireless becomes more ubiquitous. Beauvais stated that wireless is the most dynamic technology in Europe today. As proof, he noted that national governments raked in approximately US$100 billion from the auction of 3G spectrum licences two years ago. Telesystem International Wireless, a Canadian company controlled by Charles Sirois paid about $7 billion in the U.K. auction, which netted the British government about US$35 billion (RoW, May 1/00). His co-panelist, Michael Ryan of the law firm Arnold & Porter, explained the balancing act currently underway between National Regulatory Authorities (NRAs) in each nation and the European Union Commission. The EU sets broad policies, while the NRAs hold the responsibility of implementing those policies. The commission is in charge of general competition issues such as the investigation of wireless rates and the divestiture of cable assets. The allocation of spectrum is still in the hands of national governments. But the EU is working on further policy coordination and is forming a spectrum policy committee among member states. Beauvais warned that several European telcos are heavily in debt, due to the cost of UMTS licences and their M&A strategies. Most telecoms have seen their ratings downgraded as a result. Most heavily hit is Deutsche Telekom, which has an estimated net debt this year of $92 billion. Beauvais said he doubts the company will go into bankruptcy, despite its precarious financial position.

10 Years of Telecom Competition Conference –

News | June 24, 2002

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