Press Centre

Carrier Wholesale Models Must Change Says Consultants

London, 25th February 2005 – Telecom wholesale carriers need to change their business models, as their options for future growth are extremely limited. These and other conclusions were presented by BroadGroup at the International Wholesale Voice Symposium in London yesterday. Carriers confront declining growth in traditional wholesale minutes and the migration of voice to the IP world. At the same time, the financial and economic models currently used in wholesale businesses, suggest little or no margin growth opportunities exist.

At the high-level meeting attended by international carriers from Europe and the Middle East, the consultancy presented a review of the international wholesale voice market. Prices overall for international voice traffic have declined by more than 50% in the past five years, but only incremental volume growth is occurring each year in voice markets.

Although current carrier strategies tend to focus on volume and margin growth, few – including those in post-chapter 11 - would be likely achieve these objectives. Only in Europe has a sharp uplift occurred, arising from a regulatory anomaly for mobile traffic termination (equating to some USD 2.6 billion) but the consultancy warned this is temporary, and would eventually disappear once the EC imposes constraints. VoIP constitutes a small share of international retail traffic and underlines the steady migration occurring from TDM to IP, which represents a further threat to TDM carriers.

The Symposium was also provided with an in-depth presentation of the financial and economic models of wholesale businesses. The results offered carriers new benchmarks to measure against their own businesses, and informed the outcomes presented for the future of wholesale. Given the findings, BroadGroup told the Symposium that consolidation opportunities are now extremely limited, and only likely to be successful if managed in a way that truly delivers cost savings, critical mass and revenue innovation.

However, carriers did have the opportunity to migrate to completely new models, and the consultancy provided a perspective of innovative options that could be developed to deliver higher profitability.

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For further information please contact
Nicola Hayes
Vice President
nicolahayes@broad-group.com