Tuesday, December 2, 2014

Will Western Europe Telecom Revenue Slide Reverse in 2015?

An improving regulatory environment and growing demand for high speed data should ease the pressure on Western European telecoms and cable companies in 2015, Fitch Ratings  says.

That said, revenue pressure is likely to remain in place, as many analysts believe revenue will continue to shrink through 2018. Some estimates suggest the rate of decline is accelerating, in fact, though perhaps a consensus forecast is for slow declines  in the one percent to perhaps two percent range.  

Still, Fitch Ratings believes reduced competitive pressures, the result of a shift in the European Commission's approach to telecom regulation, will help.

Policy increasingly is focused on encouraging revenue growth, part of an effort to entice service providers to increase investment in next generation networks.

Fitch Ratings believes the new policies could contribute to a gradual improvement in profit margins and cash flows in 2015. Whether that will happen or not is the issue. Through 2014, revenue trends have shown a slower rate of decline, but not yet positive growth.

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