Moody’s this week raised its outlook for Europe’s telco sector to stable from negative, driven by healthy demand for data and improved consumer spending.
In a report on Wednesday, the ratings firm forecast revenue growth of 1%-2% over the coming 12-18 months as the result of an improved overall operating environment.
"Increasing demand for broadband, improved consumer spending and a change in focus from price competition to service quality – leading to price increases – will underpin European telecommunications service providers’ return to revenue growth in 2016," predicted Moody’s senior vice president and report author Carlos Winzer, in a statement.
Many telcos have already launched premium packages that are more expensive, Moody’s not ed, including Telefonica, which saw domestic monthly average revenue per user (ARPU) rise to €71.80 in the second quarter, up from €68.80 per month in Q1.
In Germany, Moody’s said it expects positive ARPU growth for Deutsche Telekom thanks to recently increased data allowances and speed increases for premium clients.
Telecom Italia has also seen domestic ARPU improve off the back of bundled offers and premium services, the company said.
Moody’s has become the second ratings firm in as many months to forecast a return to revenue growth for Europe’s telco sector.
S&P in September predicted pockets of revenue growth driven by several factors including strong data demand, tiered tariffs, and fewer price wars, among others.
