Western European Cellular Margins Continue Decline

StrategyAnalytics: Study Finds EBITDA Margins at 5 Year Low. Average Margins per User (AMPU) in Western Europe's cellular market fell by 10 percent in Q2 2006 to $14.60 per month, their steepest fall this decade. A third consecutive quarter of AMPUs below the $15 mark, a level not seen since 2002.

This quarterly report provides a health check for the wireless operator community, tracking the operational and financial performance of 113 individual operators, accounting for 75 percent of the world's cellular users. Although AMPUs fell faster in other regions in Q2 2006, such as in Central and Eastern Europe, the Middle East and Africa, Western Europe was notable in recording its eighth consecutive quarter of AMPU decline, reversing a lengthy period of growth.

Competitive and regulatory pressures are really starting to be felt in Western Europe's cellular market. While margins are still high at 42 percent, they will likely drop below the 40 percent mark within the next year.

These are tough times for Western Europe's cellular operators, with price reductions failing to stimulate voice usage and average spend on data services sluggish, despite good growth in 3G subscriber numbers.

Quarterly Operator Performance Benchmarking, Q2 2006, Publ 20060925