Mobile telecom margins safe in data surge - study

A man uses use mobile phone outside the Bank of England in central London March 24, 2010. REUTERS/Darrin Zammit Lupi

HELSINKI (Reuters) - New technology and falling equipment prices will sustain profit margins at mobile telecom operators even if data traffic over their networks grows twentyfold, a study said on Tuesday.

Mobile operators in many developed markets face growing investment bills to keep pace with surging data traffic from laptops with data cards and smartphones like Apple’s iPhone.

Telecoms consultancy Rewheel said upcoming rollouts of fourth-generation (LTE) mobile networks will enable operators to modernise their entire networks and keep operating profit margins and capital expenditure (capex) to sales ratios steady.

“While the revenue upside potential in mature markets is limited, on the cost side LTE, multimode networks and the falling gear prices open a window of opportunity for substantial savings,” the consultancy said.

Rewheel said its study was based on the financial results of an incumbent European mobile network operator and its growth projections for the next five years.

Reporting by Tarmo Virki; Editing by David Cowell