Facebook turning mobile operators into “digital drug mules”

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

VEON hires Huawei exec to lead global comms VEON hires Huawei exec to lead global comms VEON has appointed Huawei veteran Roland Sladek to drive its PR as the operator continues its attempt to reinvent itself as a tech company. More detail
Bouygues serves up new digital media content to fixed and mobile customers Bouygues serves up new digital media content to fixed and mobile customers Bouygues Telecom is giving subscribers free access to over 1,000 online publications, as it looks to tap into what it described as a surge in digital media usage. More detail
Altice consigns Portugal Telecom, SFR brands to history Altice consigns Portugal Telecom, SFR brands to history Altice will become a major brand in the telecoms world as the owner of Portugal Telecom and SFR unveiled a new global identity. More detail
Vodafone merges Maltese opco with Melita in new convergence play Vodafone merges Maltese opco with Melita in new convergence play Vodafone has agreed a deal with the owners of Melita to merge their operations in Malta. More detail
Telcos need to focus on context, conference hears Telcos need to focus on context, conference hears Context is key to the future success of telcos, speakers at the DigiWorld Future event have said. More detail
    

@eurocomms