Research Notes

10 points that top management and boards of directors in the mobile industry should be thinking about approaching in a new and different way

Everyone in the mobile business is fully aware that the industry is facing a number of challenges and that some of those challenges are already having a visible effect on some companies. These are challenges that all the top management and boards of directors from mobile operators around the world have already identified and are aware of, but should consider viewing from a new and different perspective.

Through working with over 160 mobile operators around the world, we have identified and defined the 10 largest challenges that we believe the mobile industry is currently facing. In this research note we will describe each challenge and some of the resulting consequences that we believe will happen and need to be prepared for.

Most mobile operators are in this business for the simple reason that being a mobile operator is basically a lucrative business. Today it is quite difficult to find a line of business where market players often have margins of over 40%. Even if you take into account the technological risks involved, there are still people who claim that mobile operators have a supernaturally high profitability.

Business areas in that situation will often attract attention from the political and regulative authorities and also from new market players who want to enter the market and take their share of the rewards. In practice this will result in increasing competition, decreasing prices and – if you do not adapt your costs – lower earnings.

Below are the 10 largest challenges that we believe the mobile industry should take very seriously:

1.  Decreasing prices. The regulation of roaming and the termination fees market will result in some type of consolidation. What are the consolidation scenarios for each individual country and region and how can an operator ensure that they maintain a central role in that game?

2.  Consolidation can happen in a number of ways. There is the traditional M&A, where one operator purchases another operator and merges the two businesses. An alternative model is to build and operate mobile networks together with your competitors. Some MNO’s in e.g. UK and Sweden have chosen that model. The question is which model is most suited to each individual market and what exactly should an operator focus on in the future?

3.  Packaging and branding mobile products. How should you price and package your mobile products and how do you avoid flat rate products undermining your existing business? What branding strategy should an operator use; a single-brand strategy or a multi-brand strategy? What roles will MVNOs play on this type of market?

4.  The price development of the prepaid market. The prepaid market has seen a negative development from what was initially a good business. Many operators are now continually adding mobile traffic to their offerings, as prices continue to drop. Many countries are currently seeing a catastrophic development of the prepaid market. What possibilities exist to slow down, stop or even turn the current negative development of prepaid markets around the world.

5.  General competition on the mobile broadband market is tough. Prices are falling faster than the market is growing. This is often resulting in the uneven voice-market share resulting in smaller operators having an unusually large market share on mobile broadband, while the large operators are having difficulty acquiring the same size market share on mobile broadband as they already have on voice. Could this market development result in an operator with a weak strategy ending up as a dumb pipeline on the broadband market in the future?

6.  Mobile technologies vs fixed line technologies. Should a mobile operator focus on DSL and fibre solutions, or would it be better to go all out on a pure mobile strategy? Some operators already have access to their own fixed line networks, while others need to purchase access to the copper network to sell DSL. Will market players that are currently doing business by delivering DSL over rented copper wire have any chance of success the way the mobile broadband market is developing?

7.  Increasing costs of subsidising smartphones. Are smartphones really as good business as many claim, and how can you change the negative development that an increasing number of operators are reporting? Are smartphones in fact only “smart” business for those that manufacture the coolest smartphone models and are operators in reality simply footing the bill for the smartphone party?

8.  How will mobile operators market, distribute and sell their products in the future; via own stores, dealers, online or in other ways? Mobile operators currently have large distribution costs involved in distribution and operating their own stores. Will that be a healthy and profitable strategy in the future?

9.  New market players are entering the value added services market. Which role should mobile operators have on that market? Should mobile operators focus on having their own portals, app stores, machine to machine services and mobile payments, or are there other business models that could help increase the operators’ sales and earnings in these areas and at the same time reduce their costs?

10.  How will the political and regulative system influence the mobile industry in the future? Do they have a sincere desire to see a mobile market with many market players and a high level of competition, or would they prefer to see a consolidation of the market? Will Europe end up having three main mobile operators like in the USA, or will the European market continue to be more dynamic than the American market?

The biggest question that many directors and board of directors are currently asking themselves is how to navigate an already complex industry that is simply becoming increasingly complex? They could also be asking themselves whether they would like to continue to have what some call a supernatural profitability in the future, and if the answer is yes, what should they be doing in the short term?

Strand Consult has used our experience and knowledge from the past 16 years in the mobile industry to create a workshop that is directly focused at executives in the mobile industry and that solely addresses the above issues and challenges.

All our workshops are customised using a structured process designed by Strand Consult. This ensures that our workshops increase the level of knowledge of the workshop participants, thereby reaching the predefined workshop goals and making it easier to agree on crucial strategic decisions – decisions that can ultimately decide the future of a company.

If you would like to learn more about our Executive Workshop concept, please do not hesitate to contact CEO John Strand directly. All Executive Workshops are planned and held by John Strand. You can read more about John Strand here: and contact him directly here!
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