Telecoms' debt problem hides a deeper truth about how the industry really works

"Yet, this focus on ownership and balance sheets hides an often forgotten reality: telecom networks do not generate revenue simply by existing. Fibre in the ground and spectrum in the air only become profitable through a dense commercial layer that sits between operators and customers. Sales platforms, distribution partners, call centres, and customer acquisition engines are what turn capital investment into cash flow."

"The scale of this layer is not marginal. Analysys Mason estimates that customer acquisition and retention costs account for 15 to 25 percent of operating expenditure for European telecom operators. In competitive markets such as Sweden, the UK, and the Netherlands, annual churn rates for mobile customers routinely exceed 20 percent. Under these conditions, profitability depends less on network coverage than on how efficiently services are sold, retained, and serviced."

"This is where a different kind of telecom entrepreneur operates. Jason Grannum built his career in Sweden not by owning networks or bidding for spectrum, but by building and scaling sales and distribution businesses embedded in the industry's commercial infrastructure, achieving significant commercial scale in one of Europe's most competitive markets. Operating as a mobile virtual network operator via a licensed partner, his businesses delivered fully branded service"

European telecom headlines focus on leverage and asset disposals, reflecting high capital intensity and debt from cheap financing. Network assets alone do not create revenue; profitability requires a substantial commercial layer including sales platforms, distribution partners, call centres and customer acquisition engines. Customer acquisition and retention represent 15–25% of operating expenditure for many operators. High churn in competitive markets, often above 20% annually, makes efficient selling, retention and servicing decisive. Some entrepreneurs prioritise scaling commercial infrastructure rather than owning network assets, using models such as MVNO partnerships to deliver branded services and generate cash flow from network investments.

Read at Business Matters