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Upwardly mobile: Mobile network operators go on demand in pursuit of profitable growth

The financial markets are beginning to see growth potential in mobile telecom. To realize that potential, mobile network operators (MNOs) must find ways to grow revenue. New on demand business models offer enough flexibility to innovate, differentiate and simultaneously boost margins.
IBM Institute for Business Value study
Last updated: 23 Jul 2004
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Summary

Following the industry's turn-of-the-century boom and bust, the financial markets are now beginning to see renewed growth potential in mobile telecom. To realize that potential, mobile network operators (MNOs) must find ways to grow revenue profitably.

But where will that new revenue growth come from? What new capabilities will be required to capture it? And how will operators keep costs in check while in pursuit?

The answers lie in new on demand business models that offer enough flexibility to innovate, differentiate and simultaneously boost margins.

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Analysis

Though still below their 2000 peak, mobile stocks are recovering ahead of fixed line and the stock market average. With a more optimistic economic outlook, mobile executives, like their peers in nearly every other industry, are now turning their focus toward growth. According to a recent IBM Business Consulting Survey of 456 CEOs worldwide, four out of five company leaders are counting on revenue growth as the primary way to boost financial performance in the near term.

After setting aggressive bars for EBITDA and margins the past few years, the financial markets are now supplementing those targets with revenue growth objectives. However, with subscriber markets saturating and data revenues slow to materialize, MNOs are justifiably concerned about the sources and profitability of that revenue growth.

Going full-spectrum: Pursuing multiple sources of revenue growth

Today's wireless industry includes a wide range of technologies, delivering varying combinations of bandwidth and mobility. Mobile networks continue to dominate the overall industry, and to cover all their bases, MNOs are pursuing growth along multiple paths -- voice, data and integrated combinations of both.

Throughout the coming decade, MNOs will still depend on voice services for a majority of their revenue. Generally, growth in voice revenues has become a battle for high-usage, and therefore higher-value, customers. To wrest these customers from rivals -- and retain them -- MNOs need more accurate segmentation, better-targeted value propositions and a keen focus on customer experience.

To read the complete study, download the PDF file at the top of this page.

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About the authors
iJeanette Carlsson
Jeanette Carlsson is the global communications sector lead at the IBM Institute for Business Value.
iHenry Stevens
Henry Stevens is the global wireless strategy and solutions leader for IBM Business Consulting Services.
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