The degree of internationalization and the financial performance of European mobile network operators

Abstract

Specific internationalization steps of single mobile network operators (MNO) such as the hostile takeover of the German Mannesmann corporation by the British Vodafone group have received substantial public attention. Nevertheless, there is a dearth of scholarly research using quantitative indicators to capture facets of the degree of business internationalization and associations between this internationalization extent and financial performance measures in a sample of major MNO originating from Europe. Therefore, this study gathered internationalization data from 14 European MNO for the 7-year period from 1997 to 2003. The firms had an overall proportionate mobile subscriber market share of 80.2% across 27 European countries at year-end 2003. Their average foreign revenue (subscriber) share rose from 11.4% (15.6%) in 1997 to 46.2% (52.2%) in 2003. The dispersion of degrees of internationalization in the sample was high and has remained fairly similar since 1999. No evidence of significantly positive associations between foreign revenues and subscriber shares on the one hand and three accounting-based criteria of MNO group financial performance on the other hand was found. This result is taken to imply that: (1) executives of MNO with high degrees of internationalization had not yet been successful in transforming potential into actual internationalization advantages; (2) more detailed studies on foreign market selection, entry modes, and management procedures balancing integration and autonomy requirements in running foreign MNO affiliates may uncover circumstances under which internationalization degree-performance associations for MNO are significant; and (3) national regulators should not feel obliged to implement special remedies to enhance the survival probabilities of less internationalized MNO.