The telecommunications market offers a wide range of attractive opportunities, but also faces challenges. The significant growth in data traffic, rapid technological progress and the strong demand among customers for first-class network and service quality mean that substantial investments are continually required. At the same time, with a high operator density the Central and Eastern European market is home to particularly intensive competition, inconsistent economic momentum and regulatory market intervention, which results in pressure on prices and profitability.
Key factors affecting the
Ten years ago only one in every six people used mobile services. By the end of 2013 almost half of the world’s population was connected to a mobile network, corresponding to a global user base of around 3.4 billion. The number of mobile broadband connections increased tenfold in the same period.1) This development is being driven by the sustained growth in demand for data and the need for unlimited connectivity, i. e. availability and access to information wherever and whenever required.
This results in substantial opportunities for the telecommunications market; at the same time, however, the industry has a high degree of social responsibility on account of the socio-economic aspects of its business activities. All in all, it has become one of the pillars of the global economy, directly and indirectly accounting for 3.6% of global GDP as of the end of 2013.2)
These developments give rise to the question of how and to what extent a telecommunications provider can benefit from these trends and harness them to generate profitability. In the European market in particular, the high level of saturation, intense competition and regulatory measures have resulted in declining revenues in recent years. Rapid technological change also requires substantial ongoing investment in infrastructure, while the macroeconomic conditions have also proven to be challenging.
1) GSMA, The Mobile Economy 2014, p. 2
2) GSMA, The Mobile Economy 2014, p. 3