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Change overhauled gas monopolies first, then electricity and water. Now it is the turn of the mobile telecoms industry, which grew up in a more competitive mode but faces comparable challenges in maturity.
Change in the utility sector was driven by privatisation, regulatory change and new technology. New investors facilitated market restructuring through the breakup of monopolies and selective reconsolidation for economies of scale, where regulators permitted. Managers learned to compete for customers, disaggregate integrated operations and plan innovative capacity investment in a climate of uncertain demand: All whilst delivering sustained shareholder value growth. For example, independent power projects (IPP) transformed the gas and power industries, the British Gas demergers sharpened management focus on customer service and network cost, and service outsourcing enabled operators to meet tough regulatory targets for performance and cost reduction.
Mobile operators today wrestle simultaneous challenges in an unforgiving climate. They face maturation of their markets, commitments to next generation (3G) technology, pressures to reduce their debt, and residual conflicts with traditional telcos. They can take valuable lessons from their utility cousins as they resolve how to survive and hopefully flourish again. Below, we elaborate on some scenarios and solutions for the mobile industry in Europe.
Stephen Brandon is the Chairman of Credo.
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