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International Wholesale Termination Reaches USD 12.11 Billion In 2004

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Press Release

London, May 10 2005 - A new price database and analytical report from the Wholesale Practice at BroadGroup (www.broad-group.com) reveals that wholesale termination rates for voice and mobile reached an estimated USD 12.11 billion by the end of 2004.

The analytical report – International Wholesale Termination: Voice Values in Fixed and Mobile Markets - is accompanied by a database, containing average termination prices for each month of 2004, for fixed (country and metro) and mobile services across 232 countries.

International Mobile termination now represents 40% of total global revenues, up from 36% in 2003. The increase is a reflection of two dynamics: an increasing proportion of traffic terminating at higher rates on to mobile networks and, a general increase in the mobile premium compared to fixed. In some cases an absolute increase in mobile termination rates has occurred.

Research for the report found that the mobile premium in Western Europe has a disproportionate impact on the value of the international wholesale voice market. Indeed, mobile premiums have actually increased during the period studied in the report.

The report reveals that the underlying value of fixed termination has declined between January and December of 2004 in South America, sub Saharan Africa, East and South Asia and South America. Conversely, the commoditised and liberalised markets have all recorded increases over the same period.

The context to these changes is one in which termination rates have declined across all markets during 2004, and significantly so in certain regions, except in North America and Western Europe where termination rates appear to have stabilised. Volume growth in these regions now exceeds the price declines. This outcome holds out the prospect of increasing revenues from fixed network terminating traffic.

The report also considers the profitability of wholesale carriers, and provides cost models based on minutes transported. A potential development path is outlined for the wholesale carrier businesses, demonstrating options for cost base and margin improvement.