A future for mobile operators: The keys to successful reinvention

By transforming their networks and operations with the newest technologies, mobile operators could double their cash-flow conversion within five years. The past several years have been tough for telecom companies. Their revenue and cash flows1 1. Cash flow is measured here in terms of earnings before interest, taxes, depreciation, and amortization (EBITDA) minus capital expenditures. Consumption of mobile data boomed, as masses of new wireless customers used their handsets to spend ever-increasing amounts of time online. Companies responded by investing heavily in their wireless networks, even as subscriber growth slowed. As a result, the average ratio of capital spending to revenues has remained stubbornly high, at around 15 percent, for the major players (Exhibit 1).