Industry News

East European Wireless Profitability Continues to Slide


In its Wireless Operator Benchmarking Report Q2 2005, Strategy Analytics reports that average margins per user (AMPU) in Central and Eastern Europe fell almost 30 percent in 2Q 2005. Operators are losing ground with AMPU levels 50 percent below the global average in the current quarter.

“On face value, the rapid fall in the value of new subscribers in Russia and the Ukraine is a cause for concern, although underlying profitability remains strong,” explained Sara Harris, senior industry analyst at Strategy Analytics and the report’s author. “Exceptional subscriber growth in those countries is driving strong EBITDA growth, ranging from 19 percent at MTS to 55 percent at Vimpelcom. This is still a lucrative region for global operators.”

David Kerr, vice president of the Global Wireless Practice, added, “By contrast, EBITDA growth was 10 percent in North America and a meager 2 percent in Western Europe. Following more than three years of growth, AMPUs have posted annual declines for the last three quarters in Western Europe and there is no return to growth in sight. Regulatory pressure on interconnect rates, sluggish data AMPUs, and an increasingly competitive market driven by limited subscriber growth, MVNO activity and 3G launches, are all taking their toll on financial stability in the region.

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