Rising productivity of the fixed mobile convergence trend in the telecommunications industry

Abstract

This study explores the productivity variation in the telecommunications industry by adopting the slack-based measure in the current period and the SBM-based Malmquist in the cross-periods spanning from 2006 to 2009. The observed global leading 51 telcos (telecommunications companies) are top ranking on the Forbes Global 2000, and divided into three groups of mobile-only, fixed-only, and fixed-mobile patterns. For the catch-up effect, the degree of effort in improving the productivity for the fixed-mobile operation is better than the mobile-only and the fixed-only patterns. With regard to the Malmquist index, the fixed-mobile operation had displayed TFP progress in efficiency more than the other two group patterns. Although the mobile-only pattern presented the progress in productivity, the progress rate was gradually declined. Moreover, by buying back the mobile stockholdings to fully own the fixed-line and mobile operations, these telcos are named ‘re-mergers,’ and most of them have achieved rising productivity for the study period. The findings of this research address a turning point since 2007. The number of fixed-mobile operators that had achieved efficient TE was the most among the three group patterns, and had increased from seven in 2007, to ten in 2008, and fourteen in 2009. In 2009, the observed operators that have achieved efficient TE include the three re-mergers of Telefonica, Royal KPN, and Belgacom. The fixed-line operators who spun-off their mobile branches were called ‘de-mergers’ and had displayed a regression in productivity. In conclusion, the strategic implications for being merged as a fixed-mobile operation are promising for the integrated synergy to cope with the fixed mobile convergence trend. Key words: Productivity, catch-up, Malmquist, FMC, FMS.