During the past two years, one event after another has left the international wireless landscape looking like a battleground, with numerous casualties and few, if any, players left unscathed.
Spectrum auctions in the United States and Europe have helped lead the industry into its current financial crisis. High spectrum costs have tied up mobile operator funds and pushed most European players to dangerously high debt loads. In addition, many operators aggressively bought competitors, leading to sprawling holdings and difficult oversight processes. Over-inflated share prices helped the industry continue its acquisition spree and further its financial problems.
The events of 11 September fast forwarded a cycle that was already beginning to spiral downward, pushing many companies beyond the point of recovery. Bankruptcies in the telecom arena have been followed only by heavier losses, sharper share price drops and more bankruptcies.
On top of the economic downturn, market saturation, slow data growth and high network upgrade costs have led the industry to a full-blown mess. Few countries in the world are immune, although some-particularly in Asia-are faring better than others.
And now we have allegations of fraud within the industry. Foreign investors may never again have the confidence they once did in U.S. markets after Enron, WorldCom and Xerox. We’ve made things even worse for ourselves.
Deregulation and privatization, two principles credited with pushing the telecom industry to the highs of the late 1990s, now are being questioned. In fact, the French government is considering “renationalizing” France T