Global telco revenues grew seven percent year-on-year to $1.9 trillion during 2011, new data have revealed.
However, Europe (excluding Russia) saw the weakest growth, finishing the year up three percent at $478.5 billion.
By way of contrast the BRIC countries saw growth of 14 percent.
Ovum’s Matt Walker, who compiled the data, told European Communications that amid a “volatile” market, Europe’s performance was “somewhat reassuring”.
Revenue growth was seen in both mobile and fixed telecoms, which saw worldwide sales increase by 10 and three percent respectively.
Europe halted three years of successive declines in both areas; mobile revenues grew four percent to reach $273.5 billion, roughly returning to 2009 levels.
A one percent rise in fixed line revenues to $205 billion mean it is still $13 billion short of figures achieved in 2009.
According to Walker, this is mainly down to an inability to settle on a successful business model.
“Incumbent operators are still struggling with the economics of FTTx, but some are at least starting to see a pickup in broadband revenues,” he said.
Portugal Telecom and Swisscom were the best performers in the fixed sector, registering revenues rises in excess of 11 percent.
In the mobile sector, Swisscom was again a star performer, seeing revenues rise 15.5 percent.
However, as European Communications reported in February, Swisscom reported a 4.3 percent drop in annual revenues blaming price erosion and currency fluctuations.
Walker said currency was behind this apparent conflict, pointing out that the Swiss franc appreciated roughly 15 percent versus the US dollar in 2011.
Capex levels also increased during 2011. In Europe, again excluding Russia, capex grew 7.6 percent to $64 billion last year.
Swisscom was again the biggest spender on the fixed side – capex grew 27 percent – while Telenor registered a 43 percent increase in mobile spending.
However, there was a four percent decline in capex during Q4 as European operators tightened their purse strings amid debt fears.
“Operators don’t seem confident in the recovery and are therefore spending frugally,” said Walker.
“They are finding ways to smooth their capex outlays over time,” he added.
As equity markets have shown, the first three months of 2012 have reflected a growing confidence in the economy.
“Operators should be in a better position to get on with their longer-term strategies without the distractions of financial market upheavals this year,” predicted Walker.
In particular, those with established overseas operations should grow faster, he added, highlighting Telefonica as "one to watch" given its exposure to south and central Amercian markets where Ovum expects rapid growth.
However, the analyst firm is predicting that both revenues and capex will be flat overall in 2012 with Walker describing expectations as “very modest”.
Another report launched today by management consultancy Arthur D. Little and equity broker Exane BNP Paribas is more downbeat.
They are predicting that core European telco revenues will decline by 1.8 percent per annum over the next three years.
A combination of macroeconomic headwinds, regulatory intervention and strengthening competition from OTT players such as Google, Apple or Skype are the root cause according to the authors.
Although there are significant new revenue opportunities in adjacent markets such as automotive, utilities and financial services, they will not be enough to reverse the overall negative trend, the report predicts.
If they are to succeed, operators must accelerate their transformation to online-centric business models and increase network sharing.
This, in turn, could lead to the emergence of mega-operators, local specialists and infrastructure focused plays across Europe, the authors added.
“We forecast a negative revenue trend for telecom operators, which increases the need to restructure their cost,” said Exane BNP Paribas’ Antoine Pradayrol.
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