Inside The Top Teleport Operators 2010
WTA's newest report, Inside The Top Operators of 2010, takes an insider’s look into the world’s biggest and fastest-growing teleport operators, based on data they submitted for the 2010 Top Operators rankings. The report explores trends in revenue growth, pricing, transmission capacity and mix of services from companies with combined annual revenues of US$12.8 billion.
The annual Top Operator rankings are developed by surveying teleport operators in many nations on their revenues and revenue growth, supplemented with published financial data from publicly-traded firms. From this information, WTA publishes rankings of the Global Top 20 (companies by revenue including independents and satellite/fiber operators), the Independent Top 20 (companies by revenue excluding satellite and fiber operators), and the Fast 20 (based on year-over-year revenue growth, including independents and satellite/fiber operators). The 2010 Top Operators, announced in November of that year, included companies with combined annual revenues of US$12.8 billion. Of this revenue, $11.8bn came from respondents that had submitted data to WTA consistently for the past three years. These companies posted a total $1bn gain, equal to 4.3% CAGR, over the three-year period from 2008 to 2010. This was less than half the 9.3% CAGR achieved by the previous year's Top Operators for the 2007-2009 period. By 2008, the industrialized nations were deep into the recession that continued to cramp growth through 2010, and the lower growth rates of the 2010 Top Operators reflect that fact.
The Teleport Business from the Inside
In addition to financial data, respondents also answered questions on facilities, services, markets, pricing and business results. We believe their answers offer a useful "snapshot” of the entire sector at the end of 2010, because the combined annual revenue of the independent teleport operators contributing information is equal to 29% of the $10.2bn in global revenues estimated for the independent teleport sector in the 2010 edition of WTA's Sizing the Teleport Market. What did their responses reveal?
- Pricing Changes. Only 20% of independent teleport operators reported the ability to raise prices on their core services in 2010, while 40% reported being able to increase prices for the resale of satellite capacity and 25% for terrestrial capacity. On the positive side, fewer than 20% reported price decreases for their core services, compared with 25% for satellite capacity and nearly 35% for terrestrial capacity.
- Pricing Trends. Since 2008, however, the ability of independent operators to raise prices for their core teleport & value-added services has steadily eroded. Reports of price decreases have climbed somewhat, rising from 10% in 2008 to 18% in 2010. But stable pricing has predominated: 47% reported stable pricing in 2008, while 62% did so in 2010.
- Transmission Capacity in the Future. Independent operators expected to sharply increase their use of terrestrial capacity to replace satellite capacity in the future. This was in sharp contrast to satellite operators, who expected to reduce their use of terrestrial services while continuing to grow the use of their own capacity. Satellite operators also anticipated deepening the role of teleport & value-added services in their own service mix, suggesting a continued interest in direct competition with independent operators.
- Focus on Managed Network Services. Analyzing the services offered by teleport operators, there was a clear trend from 2009 to 2010 to focus on creating and managing complex networks. The outsourced development and management of networks is the very definition of value-added, and the 2010 Top Operators appeared to be giving it serious attention.