In 2009, while the broad Communications, Media, and Technology (CMT) sector recovered almost half the market value lost in 2008, the communications sector’s recovery sputtered; even traditional sources of growth like consolidation, customer demand, and globalization showed signs of drying up. The five-year-long growth enjoyed by mobile telecom operators, especially those operating in emerging markets, slowed in 2008 and reversed in 2009. For many telecom companies, the search for new sources of value growth has never been tougher.
These are the key findings of Oliver Wyman’s 2010 Communications, Media, and Technology State of the Industry Report. The report analyzes the top 450 publicly quoted companies worldwide in CMT. “While our research found that there still remained some mileage in raw subscriber growth, it was only true for those that have or can get exposure to the right markets,” said Robert C. Fox, a Partner in Oliver Wyman’s Communications, Media, and Technology practice. “There are still opportunities to generate profit from new services; but operators need to be more flexible, ‘double-betting’ to increase the chances of success. Beyond this, intensively managing individual customer value to slow down the pace of revenue decline, and aggressively restructuring the cost base will remain critical levers for many operators,” he added.
The report identifies 10 emerging markets where there is still a high level of raw subscriber growth potential. One of its conclusions: While India and China offer the biggest opportunities, Mexico, Ethiopia, and Brazil also make the list of countries that offer growth. “Firms with exposure to these markets stand to gain, but in many markets the downward pressure on pricing limits the upside,” said Mr. Fox.