Mobile data will undermine European telecoms resurgence – Fitch
Fitch Ratings agency has claimed that aggressive competition in Europe is likely to push down pricing for the next-generation of telecom services and undermine the resurgence expected in the industry from data growth.
2014 is expected to see a range of investments in mobile data, but the ratings agency claims that the amount of competition in the market is one of the main drivers for a negative outlook for Europe this year.
4G contracts have been offered to high-spending customers at premiums of approximately 15% on 3G tariffs, and incumbents have had some success in retaining these consumers.
4G pricing is however expected to fall, as offerings increase in the market as more spectrum capacity becomes available in 2014.
In Europe, the cable industry has also seen a resurgence and competition from the sector could also be a key factor on pricing pressure.
Cable operators are beginning to launch converged solutions and quadruple play services, which could also have an effect on mobile growth and 4G.
Fitch said that Germany had a better chance of stabilising mobile service revenues, but it depends on how the sector develops.
Competition in the market is also likely to effect M&A, but increased regulation could affect how much activity there is in the market. The pending merger with E-Plus and O2 Germany, according to Fitch, could set a precedent on the minimum number of operators in each market.
Fitch also questioned the likelihood of large cross border deals, particular because of state involvement, in addition to the varying use of spectrum.