Telecom operator consolidation will be a recurring theme throughout 2014. In addition to in-market consolidation – Informa Telecoms & Media is seeing a slow but steady transition to three-operator mobile markets – we expect to see regional and global telecoms operator groups entering into discussions and potential deals. One potential move in particular would significantly change the telecom landscape. AT&T’s reported interest in Vodafone has echoes of US telcos’ expansion into European cable TV and mobile markets in the 1990s. Those European forays brought mixed success.
The telecom business generally will see a further refinement of operator strategy towards OTT players and diversification. Rather than trying to build separate digital businesses for the consumer market, telecom operators will increasingly focus on bundling digital content, communications services and publications with their core services. New revenue opportunities will be around selling connectivity – both on a retail and wholesale basis – to devices such as tablets and in cars.
Video and streaming will be two important themes in the media and entertainment business in 2014. The World Cup will be the first where live, streamed viewing captures a significant share of total viewing. And in music, streaming revenues will grow rapidly at the expense of downloads.
Highlights from Informa Telecoms & Media 2014 predictions:
A pursuit of Vodafone will be expensive and risky for AT&T
When Vodafone completes the sale of its stake in Verizon Wireless to Verizon in February, we expect AT&T to make initial approaches with a view to bidding for the entirety of the company. But we are not convinced that – if successful with its courtship – AT&T will find that married life is a bed of roses. US mobile operators AT&T Wireless and Verizon Wireless are brimming with confidence because of their successful LTE launches. They see LTE as a game changer and as the driver for the Internet of Things (IoT). But the European perspective is different. Operators there are struggling to charge a premium over 3G for LTE and it is not seen as being of fundamental importance for IoT and M2M where connectivity will only capture a small part of future value. Furthermore, Vodafone’s shares have appreciated by 24% over the last six months and a significant premium will be needed to persuade shareholders to sell. Informa believes that AT&T may be better advised to strengthen its position in the US fixed and converged market rather than pursuing Vodafone.
When Vodafone completes the sale of its stake in Verizon Wireless to Verizon in February, we expect AT&T to make initial approaches with a view to bidding for the entirety of the company. But we are not convinced that – if successful with its courtship – AT&T will find that married life is a bed of roses. US mobile operators AT&T Wireless and Verizon Wireless are brimming with confidence because of their successful LTE launches. They see LTE as a game changer and as the driver for the Internet of Things (IoT). But the European perspective is different. Operators there are struggling to charge a premium over 3G for LTE and it is not seen as being of fundamental importance for IoT and M2M where connectivity will only capture a small part of future value. Furthermore, Vodafone’s shares have appreciated by 24% over the last six months and a significant premium will be needed to persuade shareholders to sell. Informa believes that AT&T may be better advised to strengthen its position in the US fixed and converged market rather than pursuing Vodafone.