Facebook will “maximise mobile revenues” at the expense of operators as it tries to justify the huge price tag associated with its upcoming public listing, according to an M&A advisory firm.

Victor Basta, MD of tech-focused Magister Advisors, said the IPO, which could happen next month, was “about the worst thing” that could happen to mobile operators.

Specifically, Basta claims that Facebook will be under intense pressure to justify its $100 billion valuation.

“With revenues below $4 billion, Facebook will have to make rapid progress to achieve the $30 billion in revenues that will support that valuation,” he said.

Much of the required additional revenue will come from mobile, making it more difficult to share significant revenue with operators, according to Basta.

This is despite the fact that Facebook has repeatedly said that it wants partnership with operators.

At Mobile World Congress in February, Facebook CTO Bret Taylor said the social networking giant would help to redefine operators' business models.

However, while Basta agrees that Facebook wants to position itself as more “operator-friendly” than Google or Apple, the harsh reality of Wall Street’s quarterly expectations mean such promises could turn out to be empty.

“Facebook is a textbook example of an over-the-top technology and is effectively turning mobile network operators into digital drug mules,” he said.

Operators do have some leverage given the role they play in enabling Facebook to monetize users on the move.

“The challenge will be leveraging the power of that position by finding a way to work within the ecosystem rather than ‘giving it away for free’ while helping Facebook grow in value,” concluded Basta.

Have you taken our new quarterly survey on Big Data? Click here to take part.

 

More News

Ericsson “defends the industry” as it sues Apple again over patents Ericsson “defends the industry” as it sues Apple again over patents Ericsson has filed nine new patent complaints against Apple as a stand-off between the two companies intensifies. More detail
Belgacom CEO anticipates “tipping point” this year as it eyes return to growth Belgacom CEO anticipates “tipping point” this year as it eyes return to growth Belgacom’s CEO has said that this year will be a “tipping point” for the operator as it bids to return to revenue and EBITDA growth. More detail
eircom more than doubles 4G customer numbers, but revenues still slide eircom more than doubles 4G customer numbers, but revenues still slide Irish operator eircom said it had more than doubled the number of people taking 4G LTE as it unveiled its fourth quarter financial statement. More detail
Three reports revenue rise, remains on the lookout for M&A as O2 talks continue Three reports revenue rise, remains on the lookout for M&A as O2 talks continue Three reported an impressive set of 2014 financial results but did not offer any update on its acquisition of O2 in the UK. More detail
Bouygues Telecom aims for turnaround as it makes 2014 loss Bouygues Telecom aims for turnaround as it makes 2014 loss Struggling French operator Bouygues Telecom said it was eyeing a return to profitability in 2015, after continued pressure in the country’s mobile marketplace led to a fall in revenues and a loss last... More detail
    

This website uses cookies to improve your experience. Using our website, you agree to our use of cookies

Learn more

I understand

About cookies

This website uses cookies. By using this website and agreeing to this policy, you consent to SJP Business Media's use of cookies in accordance with the terms of this policy.

Cookies are files sent by web servers to web browsers, and stored by the web browsers.

The information is then sent back to the server each time the browser requests a page from the server. This enables a web server to identify and track web browsers.

There are two main kinds of cookies: session cookies and persistent cookies. Session cookies are deleted from your computer when you close your browser, whereas persistent cookies remain stored on your computer until deleted, or until they reach their expiry date.

Refusing cookies

Most browsers allow you to refuse to accept cookies.

In Internet Explorer, you can refuse all cookies by clicking “Tools”, “Internet Options”, “Privacy”, and selecting “Block all cookies” using the sliding selector.

In Firefox, you can adjust your cookies settings by clicking “Tools”, “Options” and “Privacy”.

Blocking cookies will have a negative impact upon the usability of some websites.

Credit

This document was created using a Contractology template available at http://www.freenetlaw.com.