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For the second year in a row Ovum's annual analysis of European wholesale revenue shows a decrease in all sectors of the market. The fall was greatest in the wholesale voice sector, where intense competition and technological change combined to continue the sector's inexorable decline. For the first time, Orange displaced BT as the leading wholesaler by revenue in 2017. These and other large carriers have been impacted more by the decline in wholesale voice revenue than their smaller competitors. The largest carriers must do more to reduce their dependence on commodity wholesale services, such as voice carriage and IP transit, by improving and enhancing their non-voice wholesale portfolios.

Largest carriers in European market have more to learn from their smaller competitors

Our annual analysis of the European wholesale market estimates that wholesale revenue totaled €44.3bn ($49.9bn) in 2017. This was slightly less than in the previous year, with declines in wholesale revenue from all market sectors. However, that decline was greatest in the wholesale voice sector, where revenue dropped by 13% between 2016 and 2017.

In 2017, Orange was the largest player by European wholesale revenue, overtaking BT for the first time since we started analyzing European wholesale market shares in 2003. Orange has successfully reduced its dependence on revenue from wholesale voice by diversifying and improving its offers in the wholesale non-voice sector, where it leads the European market. However, many other former incumbents are still highly dependent on revenue from rapidly commoditizing wholesale services, such as voice and IP transit. As a result, the share of European wholesale revenue earned by the 10 largest wholesalers has fallen from 72% of the total in 2012 to just 60% in 2017.

Smaller players have grown their share of the European wholesale market by developing improved and enhanced non-voice wholesale offers in response to wholesale customers' demands for greater flexibility and responsiveness. The smaller players have also been successful at targeting new wholesale customer segments with tailored services, solutions, and bundles.

Although the larger carriers may consider mergers with, or acquisitions of, their smaller competitors, the wholesale channel is rarely a major driver of inorganic growth. Instead, all wholesalers must work to get closer to their customers, understand what their priorities and needs are, and respond quickly and effectively through innovation and by partnering with players with complementary capabilities and market reach. This conclusion is confirmed by many of the comments we received in the latest Wholesale Customer Survey. The buyers and users of wholesale services need to have reasons to be loyal to the large wholesale suppliers, otherwise they will use competitive providers to secure the services, quality, and reach they require.


Further reading

European Wholesale Market Share 2016–17: The Big Picture, GLB006-000016 (December 2018)

European Wholesale Market Share 2016–17: The Detail, GLB006-000017 (December 2018)

Impacts of Consolidation on the Wholesale Market, GLB006-000015 (October 2018)

Wholesale Customer Survey 2018: Summary Findings, GLB006-000006 (June 2018)

2018 Trends to Watch: Wholesale Telecoms, GLB006-000005 (March 2018)


David James, Practice Leader, Wholesale Telecoms

[email protected]