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 Tuesday, June 28, 2011

­In a new report, Fitch Ratings says that although overall mobile service revenue growth in Europe remains under pressure (-1.4% in the 12 months to March 2011), there are significant regional differences.

In northern Europe, mobile service revenue growth turned positive in 2010 and the 12 months to March 2011, led by a strong performance in the UK and Germany. In these two countries, revenue growth from non-voice services has more than offset voice revenue declines.

In southern Europe, the trend in service revenue declines is getting worse at -5.4% in the 12 months to March 2011. The economic weakness in southern Europe is dampening demand for mobile data services and exacerbating the decline in voice revenue from regulatory and competitive pressures.

Fitch expects voice revenue in southern Europe will remain under pressure, as effective voice pricing, especially in Spain, is higher than in northern Europe. Downward pressure is expected to continue as mobile termination rates, which are higher in southern Europe, are forced down towards northern European levels by regulation. Over the medium term, mobile data might not provide as large a boost to mobile revenue growth as some operators expect. There is a risk that mobile data might be partly used as a substitute for voice and SMS services. Fitch believes that the risk will increase over time as voice over IP becomes more of a threat with technology improvements and instant messaging and social networks could start to replace SMS more widely, not just in the youth segment.

Source: Cellular News