Western Europe cellular revenues reach EUR 155 billion in 2007

Total Revenues generated by mobile operators in Western Europe reached EUR155.1 billion in 2007, 3.32% growth from 2006. In EU15 countries, cellular revenues represent 1.5% of Gross Domestic Product. Our key finding is that in most countries, mobile revenues have been growing faster than GDP which demonstrates that the telecom sector has proven to be resilient to the general economic downturn. In 2008, we expect to see a similar relatively healthy growth in mobile revenues.

Non-voice revenues appear to be driving growth as voice revenues remain under strong pressure. As market penetration continues to rise, mobile operators are turning their strategies to increasing revenue share and focusing on customer retention.

Western Europe recently passed the 500 million cellular connections mark and the most highly penetrated region in the World (120% on average). Greece and Italy have registered penetration rates above 150% in early 2008. Most countries are now home to 3-4 mobile operators, and in a time of general economic slowdown, competition is getting tougher.

In Western Europe, the top 5 operator groups (Vodafone, Orange, T-Mobile, Telefonica O2 and TIM) generated revenues of 106.6 billion Euros, or 69% of the total revenues for the region. In markets such as Germany, Italy, Belgium, Switzerland and Austria, cellular revenues have decreased year on year, partly due to: new European roaming regulations, domestic regulations (Bersani Decree in Italy), weakened ARPU, and decline in effective voice price per minute.

Operators are now focusing on revenue stimulation and fighting churn through key competitive factors such as: price elasticity, network coverage, loyalty policy, quality of services, value added services and market segmentation which includes MVNO development.