Productivity change and its determinants among leading mobile operators in Europe

Abstract

The European mobile telecommunications industry has seen increased competition and market saturation in recent years, so improving productivity will become crucially important for mobile operators in the near future. This study adopts a bootstrap Malmquist index approach to estimate productivity change among a sample of 23 of Europe's leading mobile operators over the 2008 to 2009 period. Using a second-stage regression, this article also analyses the determinants of productivity changes in terms of regulation, competition and ownership structure. The results show that mobile companies operating in countries that have recently joined the EU have a positive association with productivity change, in contrast to their counterparts in South-East Europe. Concerning market competition, the leading mobile operators that experience higher productivity changes operate in more concentrated markets. The results also indicate that international mobile operators perform better in terms of productivity change than their national equivalents. Finally, some of the implications of the findings for mobile operators’ management and policymakers are provided.

Keywords:

• productivity
• Malmquist
• bootstrap
• mobile operators
• telecommunications

JEL Classification:

• L25
• L96

Notes

¹ Retrieved from http://ec.europa.eu/information_society/policy/ecomm/tomorrow/index_en.htm.

² Greece and Bulgaria are not included in the third group because they already belong to the EU.

³ International Telecommunication Union.

⁴ For a detailed description of the bootstrap procedure, see Simar and Wilson (1999).

⁵ The ‘Older EU member’ dummy is taken as the reference alternative.

⁶ OTE, Telenor and Telia Sonera are the largest telecommunications group in the Nordic and Baltic regions. The Vodafone Group does not appear because our sample includes only leading mobile operators.