Telecom Network Operators: 3Q18 Market Review - Capex and Labor Costs Total to Nearly $600B Over Last 12 Months; Margins Under Pressure

2/12/2019, 10:55 AM (Source: GlobeNewswire)

Dublin, Feb. 12, 2019 (GLOBE NEWSWIRE) -- The "Telecom Network Operators: 3Q18 Market Review" report has been added to's offering.

This market review provides a comprehensive assessment of the global telecommunications industry based on financial results through September 2018 (3Q18). The report tracks revenue, capex and employee for 130 individual telecommunications network operators (TNOs). For a sub-group of 41 large TNOs, the report also includes labor costs, opex and operating profit. Our coverage timeframe spans 1Q11-3Q18 (31 quarters). The report's format is Excel.

The telecom industry has changed drastically over the last decade, as demand for data continues to surge due to smartphone proliferation and expanding mobile infrastructure. During this period, TNOs have diversified their service offerings and overhauled their operations to meet the rising data demand. They have invested heavily in their networks, employees, and acquisitions. Yet, operating margins have fallen recently as labor cost pressures have cropped up.

Top-line revenues for the sector remain challenged, and TNO capex requirements will continue to be high: even as networks become more software-based, vendors have figured out how to charge for software (and a range of related services). There are also late-2018 concerns of a looming recession. Telcos face an uncertain future.

Key findings include:

  • Telco revenues fell by 0.7% YoY in 3Q18, to $452B. Revenues declined by an average annual rate of 0.5% from 2011-17 though, so this is consistent with past trends. Going forward, TNO top-line growth rates will more typically be in the 0-2% range.
  • On a revenue per employee basis, the telco sector has been stagnant since 2011: the figure was $360K that year, and averaging $355K for the last four quarters. Labor costs per employee grew 2% in 2017 to $54.3K.
  • Telcos employed 5.2M in Sep 2018, just up 1% YoY. We expect employee totals to begin declining in the next 1-2 years. India alone may cut up to 100K employees in that timeframe, due to Jio's consolidation & BSNL reforms.
  • Capex for the 12 months ended Sept. 2018 was 16.5% of revenues, in line with the 16.6% recorded for 4Q16-3Q17. The highest it has been since 2011 was 17.8% in 1Q16 (annualized), when 4G buildouts were still important; there is opportunity for growth.
  • There are signs of a modest global capex surge, as capex has grown an average of 3% per quarter so far this year; early 5G buildouts are a factor. However, carriers are eager to cut heads, and most are evaluating options. Higher capital costs are often acceptable to TNOs if they allow for layoffs. Very often, layoffs are made out of urgency, and networks adjust after the fact.
  • The M&A climate remains strong for the sector. Noteworthy deals include the merger of T-Mobile and Sprint, merger of Vodafone India and Idea Cellular; and Vodafone's $18 B acquisition of Liberty Global's Germany and Eastern Europe cable and broadband assets.Annualized operating margins have fallen for four straight quarters. In 3Q18, the average TNO operating margin dropped 1% to 12.67%. Labor costs are one drive: annualized labor costs per employee have been rising, up 4.6% in 3Q18 to $55.7K (from $53.3K in 3Q17). As 5G approaches, TNOs will keep up the pressure on their staff spending. They will also continue to look for ways to reduce customer acquisition & retention costs, through both technology investments & business partnerships.

Key Topics Covered:

1. Abstract
2. Analysis
3. Key stats through 3Q18
4. Operator rankings
5. Rev, capex and headcount
6. Deep dive cost analysis
7. Subs & traffic
8. Exchange rates
9. About (including methodology)

List of Exhibits

  • TNOs: Annualized revenue ($M) and YoY growth (%), 1Q14-3Q18
  • TNOs: Annualized capex ($M) and capital intensity (%), 3Q14-3Q18
  • Labor cost/revenue (%), 2017
  • Labor cost and labor cost per employee, 2017 YoY change (%)
  • Change in annualized operating margins (YoY percentage point difference 4Q13-3Q18)
  • Local currency value vs. US$ (QoQ change)
  • Top 20 share of the market, 3Q18
  • Top 20 TNOs by total capex, 3Q18
  • Top 20 TNOs by total revenue, 3Q18
  • TNOs: YoY growth in single quarter revenues
  • TNOs: Annualized capital intensity, 4Q11-3Q18
  • TNOs: Revenue and RPE, annualized 1Q14-3Q18
  • TNOs: Capex and capital intensity (annualized), 1Q14-3Q18
  • TNOs: Total headcount trends, 1Q11-3Q18
  • TNOs: Revenue and RPE trends, 2011-17
  • TNOs: Capex and capital intensity, 2011-17 ($ Mn)
  • TNOs: Capex and capital intensity, 3Q14-3Q18 ($ Mn)
  • TNOs: Revenue and RPE trends, 3Q14-3Q18
  • Top 41 TNOs by total opex, 3Q18
  • Top 41 TNOs by labor costs, 3Q18

Companies Mentioned

  • A1 Telekom Austria
  • Advanced Info Service (AIS)
  • Altice Europe
  • Altice USA
  • America Movil
  • AT&T
  • Axiata
  • Axtel
  • Batelco
  • BCE
  • Bezeq Israel
  • Bharti Airtel Limited
  • Bouygues Telecom
  • BSNL
  • BT
  • Cable ONE Inc.
  • Cablevision
  • Cellcom Israel
  • CenturyLink
  • Cequel Communications
  • Charter Communications
  • China Mobile
  • China Telecom
  • China Unicom
  • Chunghwa Telecom
  • Cincinatti Bell
  • CK Hutchison
  • Clearwire
  • Cogeco
  • Com Hem Holding AB
  • Comcast
  • Consolidated Communications
  • Cyfrowy Polsat
  • DEN Networks Limited
  • Deutsche Telekom
  • DirecTV
  • Dish Network
  • Dish TV India Limited
  • DNA Ltd.
  • Du
  • EE
  • Elisa
  • Entel
  • Etisalat
  • Fairpoint Communications
  • Far EasTone Telecommunications Co. Ltd.
  • Frontier Communications
  • Globe Telecom
  • Grupo Clarin
  • Grupo Televisa
  • Hathway Cable & Datacom Limited
  • Idea Cellular Limited
  • Iliad SA
  • KDDI
  • KPN
  • KT Corporation
  • Leap Wireless
  • LG Uplus
  • Liberty Global
  • M1
  • Manitoba Telecom Services
  • Maroc Telecom
  • Maxis Berhad
  • Megafon
  • MetroPCS Communications
  • Millicom
  • Mobile Telesystems
  • MTN Group
  • MTNL
  • NTT
  • Oi
  • Omantel
  • Ooredoo
  • Orange
  • PCCW
  • PLDT
  • Quebecor Telecommunications
  • Reliance Communications Limited
  • Reliance Jio
  • Rogers
  • Rostelecom
  • Safaricom Limited
  • Sasktel
  • Shaw Communications
  • Singtel
  • SITI Networks Limited
  • SK Telecom
  • Sky plc
  • SmarTone
  • SoftBank
  • Spark New Zealand Limited
  • Sprint
  • StarHub
  • STC (Saudi Telecom)
  • SureWest Communications
  • Swisscom
  • Taiwan Mobile
  • Tata Communications Limited
  • Tata Teleservices
  • TDC
  • TDS
  • Tele2 AB
  • Telecom Argentina
  • Telecom Egypt
  • Telecom Italia
  • Telefonica
  • Telekom Malaysia Berhad
  • Telenor
  • Telia
  • Telkom Indonesia
  • Telkom SA
  • Telstra
  • Telus
  • Thaicom
  • Time Warner
  • Time Warner Cable
  • TPG Telecom Limited
  • True Corp
  • Turk Telekom
  • Turkcell
  • Veon
  • Verizon
  • Virgin Media
  • Vivendi
  • Vodafone
  • Vodafone Idea Limited
  • Wind Tre
  • Windstream
  • Zain KSA

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Related Topics: Telecommunications and Networks


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