Global turnover growth driven by Asia, but in difficulty in Spain and especially in Italy where in the first half of 2024 revenues increased despite the mobile sector still suffering. This is the snapshot taken by theMediobanca Studies Area within the scope of the isurvey on the telecommunications sector. The study analyses data from the first six months of 2024 and the five-year period 2019-2023 of the 32 largest international telcos with revenues exceeding nine billion euros each, of which 13 are based in EMEA, 12 in Asia & Pacific and 7 in the Americas.
Telco: turnover increases in the first half, driven by Asia
In the first half of 2024 The aggregate turnover of the world's leading telcos grew by 1,5% compared to the first half of 2023. The lion's share is played by Asian companies, which in the same period recorded an increase of 2,8%, thanks to Japanese (+3,1%) and Chinese (+2,9%) players who benefited from the strengthening of their market share in 5G and the advanced degree of industrial diversification.
The ICT and innovative services revenues for the top Asian players – the survey reveals – already develop over 20% of the overall numbers. Even the EMEA operators are growing (+1,4%), while American telcos show a slight contraction of 0,2%, the study highlights.
“Differences also remain in terms of operating profitability”, the experts highlight: the Mon of the first six months of 2024 grew by 4,3%, thanks to Emea (+11,7%) and Chinese companies (+8,2%), despite the -1,1% recorded by US groups which nevertheless preserved the best EBIT margin in the sector (21%). European companies recorded a greater increase (Mon at +15,5%), mainly determined by the performance of Vmed O2 UK (from 85 to 512 million, +501,4%, following lower amortizations for 396 million), Tim (+19,1%) and Deutsche Telekom (+15,1%).
Glthe investments decreased overall by -5,1%, with peaks of -13,6% in the Americas and 8,6% in Europe, despite the Old Continent being behind in the development of 5G and, more generally, in reaching the connectivity targets of the “gigabit society” project to compete internationally. To reach them, it is estimated that between 170 and 200 billion in additional investments will be needed at European level by 2030.
Revenue rankings: Tim seventh in Europe, 19th in the world
In the first half of 2024, the European revenue ranking is dominated by Deutsche Telekom with 56,3 billion euros (+2,3% on 1H 2023). Second place for the Spanish Telephone with 20,4 billion (+1,1%), third for the French Orange with 19,8 billion (+2,5%, net of the Spanish activities transferred to Masorange). Followed by Vodafone with 18,4 billion (+2,8% on 2023, excluding Spain and Italy), IT Group with 11,6 billion (-1,2%), Altice (7,6 billion; -3,8% on a pro-forma basis).
Tim is in seventh place in the ranking, with revenues up 3,5% to 7,1 billion euros. “With the inclusion of NetCo among discontinued operations (sold in July 2024), the Italian incumbent's revenues are driven by activities in Brazil (+7,8%), while the domestic unit grew by 1,6%, thanks in particular to Tim Enterprise (+4,9%) and Sparkle (+0,4%), with TIM Consumer closing unchanged on the half-year in comparison, the report highlights.
La Centrality of Asian players is confirmed by the presence of four of them among the top ten operators. first place in global revenue in fact, the Chinese China Mobile (€128,6 billion) ranks first, ousting for the first time the American Verizon (121,2 billion), in turn followed by the German Deutsche Telekom (with 112 billion, two thirds of which developed in the US by the subsidiary T-Mobile) and the other American AT&T (€110,8 billion), which fell from the podium after the sale of Warner Media in April 2022.
Swisscom is in 26th position with 12 billion, but after the finalization of the acquisition of Vodafone Italy it would rise to 18th position with estimated revenues of 16,7 billion, thus surpassing Tim. The Italian incumbent, currently 19th, would instead fall to 22nd place with revenues of 13,6 billion, calculated excluding Sparkle (in the process of being sold) and NetCo, the company that in July 2024 received Tim's fixed network. "Thanks to its deconsolidation, Tim's financial debts decreased by 13,8 billion (not considering the possible earn-outs for 2,9 billion), aligning the Italian incumbent with the best levels of financial leverage in Europe. With the operation, Tum is also expected to save up to 800 million in passive interests annually, on a total of 1.991 million recorded by the company in 2023, equal to 12,4% of consolidated revenues, an incidence lower only than the 15,6% recorded by Altice", explains Mediobanca in the report.
Telcos in Italy: Fixed telephony grows, mobile suffers
In the first half of 2024 domestic revenues of the main Italian operators (excluding Vodafone) grew by 1,9%, driven by fixed telephony, which on an annual basis recorded an increase of 3,9%, confirming the positive trend already observed in 2023.
In reverse, the declining trend (-1%) of the Mobile sector continues. The contraction in turnover is concentrated above all in the mobile divisions of Wind Tre (-4,5%), Tim, (-1,8%) and PosteMobile (-0,6%). Iliad Italia instead recorded a double-digit increase (+11,3%) which also benefits from the contribution of fixed-line telephony services launched in January 2022. Fastweb also rose (+7,1% overall revenues, +13,7% in mobile).
Regarding last year's results, Team (Italian activities) was first in terms of turnover (11,9 billion, +0,5% on 2022) ahead of Vodafone (4,8 billion, +0,4%), Wind Tre (4,1 billion, -3,4%) e Fastweb (2,6 billion, +6,2%), with Iliad in 5th position (1,1 billion, +16,5%). Excluding Iliad, Open Fiber and smaller companies, in the five-year period 2019-2023 Fastweb is the only one to grow (+18,3%), while the Big 3 show contractions between 14% and 19%, with the greatest difficulties concentrated in the consumer segment.
“In a scenario of general reduction in margins, in 2023 Fastweb confirmed itself as the operator with the highest EBIT margin (8,1%) despite closing the financial year with a loss, for the first time since 2014, mainly due to the 93 million write-down of the stake in the subsidiary Fastweb Air. The profitability of Vodafone, Wind Tre and Tim is worsening”, explains the survey.
Telcos and the Stock Exchange
The aggregate capitalization of the main global telecommunications operators stands at 1.452 billion euros at the end of September 2024, up 12,6% on December 2023.
The five companies with stock market values above 100 billion represent 50,9% of the overall capitalization: these are China Mobile (186,9 billion), Verizon (169,4 billion), At & t (141,3 billion), Deutsche Tel. (131,9 billion) and Bharti Airtel (109,5 billion).
Between December 2018 and September 2024 the equity return (including dividends) of telcos was equal to +61,6%, lower than the +101,5% recorded by the global stock index whose performance is approached only by Asian telcos (+87,1%). Emea follows with a return of 51,4% (which drops to +20,1% excluding the outlier Deutsche Telekom) and the Americas (+30,9%). Restricting the analysis to the period December 2022 – September 2024, the Indian Bharti Airtel has the largest variation (+102,3%), while Tim is in 18th position with a +15,3%.
