Ovum foreshadows era of cross-border telco consolidation

by Stuart Corner

Friday, 31 October 2008

Page 1 of 2 ! Suggesting that the model of the country-specific telco may be outdated, market research firm Ovum is urging telcos to exploit the global financial crisis by seeking opportunities outside their own borders. But this has been tried before - with limited success. Ovum senior analyst Matt Walker, author of a new Ovum report credit crisis brings telecom to a turning point, argues that "With the exception of a few truly global carriers - Vodafone, Hutchison, and smaller players such as SingTel Optus, Zain, MTN, and Etisalat - most of the world's service providers operate primarily within one country. Overseas investments are often managed at arm's length." He contends that the global financial crisis could change this. "In the past, national rivalries, regulatory hurdles, and other constraints limited cross-border consolidation. European [international network operators] have aggressively bought into overseas markets but not always integrated operations to maximum effect. They have just started centrally managing procurement, loosely, over the last 2-3 years. Carrier consolidation within Asia has been minimal. Outside of small deals and the big changes forced by the Chinese government; very little has occurred on a cross-border basis." He holds up SingTel Optus as "the clearest counterexample," saying that,  on a global scale, the collapse of Global Crossing and other undersea network-based players (eg FLAG) during the 2000-02 bubble burst "scared investors away from business models appearing aimed at creating truly global telecoms firms." According to Walker, "The industry is not effectively exploiting this fact, in part because it has never been forced to." Well, it depends how you define a global telecoms firm. Certainly there have been numerous attempts by telcos in the past, including Telstra to build up significant portfolios of investments in telco businesses outside their home markets, but few if any succeeded. Twenty plus years ago the break up of the old AT&T monopoly created seven baby bells - regional telcos with fat profits from their regulated local telecoms monopoly and largely barred from other telecoms investments in the US by the same regulations. All started aggressively investing outside the US, but today little is left of those initiatives. It was 10 years go this week that Bellsouth exited the New Zealand market when Vodafone bought its cellular network and today's SingTel Optus is a legacy of that same strategy: Optus was created as a joint venture between Bellsouth, Cable & Wireless and Australian investors. CONTINUED << First page <   1 2 Next page > Last page - Post your comment >>

 

< Next story in category		Previous story in the category >

Visitors last 30 days Suscribers

904,266 13,751