Good luck squeezing saturated market, Euro mobe firms, say Orange, Telefonica

Based profits on roaming charges? Too bad! Only the IoT-ist will survive

Europe's saturated mobile market is forcing operators to eye new routes to revenue in order to survive, big cheeses at Orange and Telefonica have said.

Christian Maitre, CIO deputy of the Orange Group, and Juan José Hierro, head of Telefonica's newly created IoT unit were speaking to The Register at the TM Smart City InFocus 2016 event in Yinhuan, China.

European operators have increasingly sought to flog their assets in recent years in order to combat dwindling revenue.

Telefonica had hoped to sell its UK biz O2 to Three's owner £10.5bn to Hutchison Whampoa until the EU squashed that deal earlier this year.

The EU slammed down the deal because it said reducing the number of mobile operators in the UK would have a negative impact on consumers.

However, operators have said they need to consolidate to raise investment cash - now that world + dog now has a mobile phone contract.

Orange recently sold its joint stake in EE to BT for £12.5bn, the company was formed in partnership with Deutsche Telekom back in 2010.

The BT acquisition of EE was waved through by regulators, as it would not specifically reduce the number of operators in the market. However, it has created a huge entity in the mobile and broadband space.

Responding to the question of how operators can move away from the traditional mobile contract revenue, Maitre said: "Of course we need to change the way we operate in Europe - which is a very saturated market."

Orange recently launched its "vision for 2020" strategy, which will focus on IoT, mobile banking and smart cities - among other areas.

José Hierro agreed: "We cannot sustain our traditional business - it is something that is slow growing."

He added: "That is one of the reasons why we are paying so much attention to IoT."

On Europe’s decision to squash Telefonica’s sale of its UK subsidiary O2 to Three, he said the company "will move forward”.

"We will continue with O2; it is performing very well. And we will explore how to bring IoT solutions and offer IoT platform and services in the UK through O2."

Maitre expects fewer mobile operators in Europe over the coming years, noting that some countries have 10-12 operators. "So sometimes if one operator lowers the price: what can you do? The strategy in Europe for telecoms companies is maybe to merge.

"We need to have level of growth in other places, for example our operations in Africa are growing."

The recent decision by the EU to remove roaming charges abroad will have an impact on smaller providers, said Maitre.

"It has changed the revenue a lot for some operators... maybe that will lead to fewer operators. Some small operators may disappear because their market was based on roaming charges."

He said such regulatory changes can be useful as it forces companies to reinvent themselves, but said he favours a more phased approach. ®

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