The Top 10 Telecoms Operators: Transformation, growth and convergence in the leading players

The Top 10 Telecoms Operators: Transformation, growth and convergence in the leading players

By ranking and profiling the major players in the global telecoms industry, this report will provide insights into the dynamics, trends and technologies that are shaping today’s telecommunications market; growth estimates for the telecoms industry are predicted to be around 5-7% per year with total revenue reaching $2.2 trillion in 2010. As the provision of traditional voice services becomes saturated, data services providing high-speed access to the Internet, emails and the intranet will drive industry growth in future. With over 1.8 bn wireless subscribers around the world at the beginning of 2006, it is estimated that by the end of the year, wireless revenue will account for over half of all telecommunications industry revenue by 2010. The convergence of fixed and wireless services is resulting in strong M&A activity in the telecoms industry, particularly in the US. In Europe, even though many of the incumbent’s competitors are international and operate across borders, individual operating units are usually country-specific and tend to have substantial autonomy. The countries of Eastern Europe, particularly those that have recently joined the EU, are becoming rapidly integrated into the economy of Western Europe. The North American telecoms industry has been undergoing bouts of consolidation over the last five years, with the market increasingly controlled by a handful of large providers. Latin America is seeing considerable growth in mobile and Internet services, with Argentina, Brazil and Mexico accounting for 90% of the market.

Table of Contents
The Top 10 telecoms operators – Transformation,
growth and convergence in the leading players
Executive Summary 14
Introduction 14
NTT Corporation 16
Verizon Communications 17
Deutsche Telekom 17
Vodafone 18
France Télécom 19
Telefonica 19
AT&T 20
BT Group 21
Sprint Nextel 22
China Mobile 22
Chapter 1 The changing face of the
telecoms industry 26
Summary 26
Introduction 27
Scope and methodology of report 27
Telecommunications today 27
Market trends 29
EMEA 29
North America 30
Central and Latin America 31
Asia-Pacific 32
Summary 33
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Chapter 2 Nippon Telegraph and Telephone
(NTT) Corporation 36
Summary 36
Key facts 36
Company overview 37
Major products & services 39
Company history 40
Recent developments 42
Financial performance 43
Fixed line 43
Wireless 44
Data 44
SWOT Analysis 45
Strengths 45
Restructuring leading to new business opportunities 45
International activities 46
Weaknesses 46
Deregulation leading to fierce competition in all areas of business 46
Slow to adapt to changing broadband environment 46
Opportunities 47
Competitive advantages in ADSL sector 47
Good cross selling opportunities 47
New services in development 47
Threats 48
Shift from dial up Internet traffic to ADSL 48
Existing and new competition 48
Conclusions 48
Top competitors 49
Chapter 3 Verizon Communications 52
Summary 52
Key facts 52
Company overview 53
Major products & services 54
Company history 55
Recent developments 58
Financial performance 58
Customer growth 59
Domestic telecoms 59
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Wireless 60
Information Services 61
International 61
Acquisitions 61
SWOT Analysis 62
Strengths 62
Leading position in key sectors 62
Low churn rate 63
Market presence 63
Weaknesses 63
Weak performance of local phone business 63
Weak international business 64
Low ARPU 64
Opportunities 64
Increase in demand for wireless services 64
Recovery in enterprise market 65
Introduction of new services 65
Threats 65
Regulatory pressures 65
Competitive pressures in wireless sector 66
Conclusions 66
Top competitors 66
Chapter 4 Deutsche Telekom 68
Summary 68
Key facts 68
Company overview 69
T-Online 70
T-Mobile 70
T-Systems 71
T-Com 71
Major products and services 71
T-Com 71
T-Mobile 71
T-Online 72
T-Systems 72
Company history 73
Recent developments 74
Financial performance 75
Customers 75
Business customers 76
Wireless 76
Deutsche Telekom 76
Fixed line/broadband 77
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T-Com 77
T-Online 77
SWOT Analysis 78
Strengths 79
Global brand recognition 79
Strong T-Com division 79
Strategic division 79
Weaknesses 79
Geographical 79
Opportunities 80
Broadband market 80
3G Services 80
US and Eastern Europe markets 80
Rising convergence 81
Threats 81
Saturation of German mobile market 81
Conclusions 81
Top competitors 82
Chapter 5 Vodafone Group 84
Summary 84
Key facts 84
Company overview 85
Major products & services 87
Company history 88
Recent developments 90
Financial performance 92
Mobile revenues by geography 93
Germany 93
Italy 93
United Kingdom 94
Spain 95
Other Europe, Middle East and Africa 95
Americas 95
Asia-Pacific 96
SWOT Analysis 96
Strengths 97
Leadership position 97
Global brand strength 97
Growth of Vodafone Live! 97
Weaknesses 97
Limited exposure in emerging markets 97
High debt 98
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High customer churn rates 98
Lack of control over partnerships 98
Opportunities 99
Expanding market boundaries 99
Growth through 3G 99
Threats 99
Increased competition 99
Market saturation in Europe 100
Conclusions 100
Top competitors 100
Chapter 6 France Télécom 104
Summary 104
Key facts 104
Company overview 105
Major products & services 106
Company history 108
Recent developments 109
Financial performance 110
By business 111
Personal Communication Services (PCS) 111
Home Communication Services (HCS) 112
Enterprise Communication Services 113
Directories 113
SWOT Analysis 114
Strengths 114
Diverse product portfolio 114
Strong contract mix within the company’s customer base 115
Diversified geographic presence in Europe 115
Weaknesses 115
High debt 115
High Orange UK churn rate 115
Disintegrated strategy in key markets 116
Opportunities 116
Strategic alliances 116
3G 116
Threats 116
New accounting standard 116
Political and economic instability in high investment regions 117
Conclusions 117
Top competitors 117
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Chapter 7 Telefónica 120
Summary 120
Key facts 120
Company overview 121
Major products & services 125
Company history 125
Recent developments 128
Financial performance 129
By business 130
Fixed line business 130
Mobile business 131
Cesky telecom 131
Directories business 132
Atento Group 132
Telefonica Deutschland 132
SWOT Analysis 133
Strengths 133
Leading market position in Latin markets 133
Diversified operations 134
Strong international presence 134
Weaknesses 134
Lack of presence in growing markets 134
Declining call revenues 135
Opportunities 135
Growing demand for ADSL in Spain 135
Acquisition of BellSouth’s Latin American assets 135
Acquisition of O2 135
Threats 136
Economic slowdown in key markets 136
Declining fixed line market in Spain 136
Regulatory threat in Spain 136
Conclusions 137
Top competitors 137
Chapter 8 AT&T Corp 140
Summary 140
Key facts 140
Company overview 141
Major products & services 143
Company history 144
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Recent developments 146
Financial performance 147
SWOT Analysis 148
Strengths 149
Strength in diversity 149
Network capacity 149
Patent portfolio 149
Weaknesses 150
Acquisition integration 150
Continuing implications of split-offs 150
Debt 150
Opportunities 150
Advanced IP services 150
AT&T Labs 151
Threats 151
Rapid technological development 151
Competition 152
Substitute technologies 152
Conclusions 152
Top competitors 153
Chapter 9 BT Group 156
Summary 156
Key facts 156
Company overview 157
Major products & services 160
Company history 160
Recent developments 163
Financial performance 164
By customer segment 164
SWOT Analysis 166
Strengths 166
Market leadership 166
Steadily expanding customer base 167
Range of services to cater to a balanced customer portfolio 167
Global reach 167
Weaknesses 168
DSL penetration 168
Shrinking market share in fixed line services 168
Opportunities 169
Project Bluephone 169
Network simplification 169
Threats 169
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Shift from fixed to mobile services 169
Voice over Internet Protocol 170
Increasing competition in fixed line services 170
Conclusions 170
Top competitors 171
Chapter 10 Sprint Nextel 174
Summary 174
Key facts 174
Company overview 175
Major products & services 178
Company history 179
Recent developments 182
Financial performance 183
Wireless 183
Long Distance 184
Local 184
SWOT Analysis 185
Strengths 185
Well positioned to face competition 185
High ARPU 186
Wide area coverage 186
Robust network capabilities 186
Diversified offerings 187
Financial synergies 187
Weaknesses 187
Dependence on wireless services for strategic market positioning 187
Nextel’s dependence on Motorola for wireless equipment 187
Opportunities 188
Foray into fourth generation (4G) wireless technologies 188
Growing demand for data services 188
VoIP and broadband 188
Threats 189
Integration of two disparate networks and billing systems 189
Changing competitive landscape in the wireless space 189
Conclusions 189
Top competitors 190
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Chapter 11 China Mobile 192
Summary 192
Key facts 192
Company overview 193
Major products & services 194
Company history 196
Recent developments 197
Financial performance 198
SWOT Analysis 199
Strengths 199
Leading market position 199
Strong financial performance 200
Reduced leased line expenses 200
Brand awareness 200
Weaknesses 200
Increasing marketing costs 200
Opportunities 201
Size of market 201
New businesses 201
3G 201
Threats 202
Increasing competition 202
Conclusions 202
Top competitors 202
Index 203
List of Figures
Figure 1.1: Top 10 Telecoms companies by annual revenue ($bn), 2005 16
Figure 2.2: SWOT Analysis: NTT Communications 45
Figure 3.3: SWOT Analysis: Verizon Communications 62
Figure 4.4: SWOT Analysis: Deutsche Telekom 78
Figure 5.5: SWOT Analysis: Vodafone 96
Figure 6.6: SWOT Analysis: France Télécom 114
Figure 7.7: SWOT Analysis: Telefonica 133
Figure 8.8: SWOT Analysis: AT&T 148
Figure 9.9: SWOT Analysis: BT Group 166
Figure 10.10: SWOT Analysis: Sprint Nextel 185
Figure 11.11: SWOT Analysis: China Mobile 199
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