Following yesterday's post, here's some related thinking on the impacts on operators of handset leasing. Handset sales represent around 25% of operator revenues in a typical European market, but generate only around 5% of margin. It may therefore be the case that the scenario described would lead operators to a more profitable structural model than exists today. Oil companies are consistently and acceptably profitable, despite being (literally in some cases) the ‘dumb pipe’ that operators are so desperate to avoid becoming. One of the reasons for the oil majors sustained profitability is clear focus on their role in the value chain – to supply the fuel that enables transportation, relying primarily on location, then brand and finally product innovation to compete. BP or Shell do not need to subsidise the purchase of a car in order to drive consumption of fuel because consumers are ‘hooked’ on it (it gets them from place to place) and there are many credible car manufacturers an...
August was a busier month than July for telecoms investments, with OneDotCom's announcement of $593Mn of investment in a B2B focussed ISP in South Africa trumped by MTN announcing a further billion dollars of network build in Nigeria. The latter market remains the Wild West from a legislative, regulatory and stability point of view, but an economy heavy with the potential of massive population and natural oil wealth continues to prove a draw. Also notable this month was American Tower's $140Mn tower upgrade programme in Ghana - a smaller market, but one that is made attractive day by being the polar opposite of Nigeria in terms of investment readiness.
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