1. Introduction and Methodology
2. Growth Performance Review: driven by acquisitive international expansions
2.1. A lackluster performance on domestic markets
2.1.1. Unfavourable economics on legacy services
2.1.2. Marginal impact so far of innovative services
• Fixed mobile Convergence: keep it simple
• Content distribution: the revolution will not be televised
• Content production: say goodbye to Hollywood?
• Enterprise services: buying a know-how, at the cost of lower margins
2.2. Growth driven by international markets
2.2.1. International expansion through M&A
• Mergers and acquisitions have enabled European operators' international expansion
• …but catastrophic past experiences in terms of shareholder value performance have made investors very cautious about M&A in telecoms
2.2.2. M&A: an efficient yet expensive growth option
3. European operators' financial performance review
3.1. Operational efficiency: fewer margins, sustained investments
3.2. Investment intensity: the impact of networks upgrades
3.3. Capital efficiency: achieving more with less
3.4. ROIC: contrasted models but preoccupying evolutions
• Very different strategies can yield superior return on invested capital…
• …but the overall negative variation in return on invested capital over the recent years is worrisome
4. A Focus on Emerging Markets
4.1. Achieving high margins despite unfavourable environment
4.2. Success requires a regional approach
4.3. Operational performance: not only a matter of headcount
4.4. Commercial performance: driven by distribution and churn management
• Subscriber acquisition costs: roughly on par
• Prepaid Distribution: from street dealers to electronic couponing
• Prepaid churn management: minor improvements yield high rewards
5. Implications and Conclusions
5.1. Volume strategies
5.1.1. In emerging markets: expensive but efficient on a regional scale
5.1.2. In advanced markets: more than a zero-sum M&A game?
5.2. Value strategies
5.2.1. Creating value from a better segmentation
5.2.2. Enhanced connectivity provider
• Audience monetisation
• From SS7 towards SIP
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Based on past evolutions of the industry this report covers the macro-movements of the telecoms business,and looks for the next growth options for European players, in particular volume strategies vs. value strategies. It is based on quantitative research on the commercial, operational and financial performances of 14 European operators (12 integrated incumbents, 1 wireline incumbent, 1 mobile), and 5 emerging operators.
