Friday, July 19, 2013

European Service Providers Continue to Face More Market Troubles than North American Providers

New financial results from service providers in North America and Europe continue to show the disparate fortunes of tier-one service providers in those regions.

Verizon Communications reported second-quarter 2013 results that stand in high contrast to results many Europe-based service providers are likely to post in 2013, across both Verizon’s fixed network and mobile lines of business.

Service revenues in the quarter totaled $17.1 billion, up 8.3 percent year over year. Retail service revenues grew 7.8 percent year over year, to $16.4 billion.

Verizon Wireless generated $20 billion in second-quarter revenues, up 7.5 percent year over year. Postpaid average revenue per account rose 6.4 percent to $152.50. Wireless operating margin came in at 32.4 percent, up from 30.8 percent for the same quarter of 2012.
In the wireline business, revenues increased 4.7 percent to $3.6 billion in the second quarter, with most of the growth coming from Verizon’s FiOS service. Verizon added 161,000 net new customers to its FiOS Internet service and 140,000 to its FiOS video service. FiOS Internet service is up 12.2 percent compared with the second quarter of 2012, and FiOS video service is up 12.6 percent.

Vodafonel Group service revenue including joint ventures declined 3.5 percent; or 1.3 percent excluding joint ventures. Though revenue grew strongly in Turkey at 15.5 percent and India at 13.8 percent, revenues in Germany declined 5.1 percent and 4.5 percent in the United Kingdom.

Revenue in Italy dropped 17.6 percent, while in Spain revenue dropped 10.6 percent.

Telefonica, Europe's biggest telecom operator (ranked by revenue), in May 2013 reported a 11.7 percent revenue drop to 6.7 billion euros ($8.8 billion) for its European operations in the first quarter, with total revenue down 9 percent at 14.1 billion.

Deutsche Telekom said revenue in Europe shrank 6.9 percent to 3.33 billion euros, while overall revenue fell 4.5 percent to 13.8 billion.

But there are perhaps signs that Verizon is being forced to spend a bit more to propel those earnings. Verizon operating expenses were up 1.4 percent year over year.

Sales, general and administrative expenses were up 2.2 percent in the quarter to more than $8 billion.

Verizon also is slightly increasing its capital spending guidance from $16.2 billion in 2013 to a new range of $16.4 billion to $16.6 billion, with the capital slated for deploying new wireless data and services spectrum in the second half of 2013.

Retail postpaid average revenue per account increased 6.4 percent over the second quarter 2012, to $152.50 per month.

The number of retail postpaid customers grew by 941,000 in the quarter, bringing Verizon’s total number of retail connections to 100.1 million, up 6.3% compared with the second quarter of 2012.

Mobile  operating income margin was 32.4 percent, compared with 30.8 percent in second quarter of 2012. EBITDA margin on service revenues was 49.8 percent.

Fixed network consumer revenues were $3.6 billion, an increase of 4.7 percent compared with second-quarter 2012. Consumer ARPU for wireline services increased to $109.67 in second-quarter 2013, up 9.4 percent compared with second-quarter 2012.

FiOS revenues grew 14.7 percent, to $2.7 billion in second-quarter 2013, compared with $2.4 billion in second-quarter 2012. ARPU for FiOS customers continued to be more than $150 in second-quarter 2013.

Sales of strategic services to global enterprise customers increased 4.8 percent compared with second-quarter 2012 and represented 57 percent of total enterprise revenues, compared with 52 percent in second-quarter 2012. Strategic services include cloud and data center services, security and IT solutions, advanced communications, strategic networking and telematics services.

No comments:

Many Winners and Losers from Generative AI

Perhaps there is no contradiction between low historical total factor annual productivity gains and high expected generative artificial inte...