Technology and media (4 of 8)

Telecom: mobile and fixed networks

About 8 minutes to read in full, or 1 minute for the short version belowFacts checked 30 September 2026

In one minute

Companies build mobile and broadband networks and charge people and businesses a monthly fee to use them for calls and data.

The big idea: An operator spends heavily upfront on spectrum (radio licences), towers and cables, then sells access every month. Revenue is subscribers times average revenue per user (ARPU), and almost all costs are fixed, so profit depends on filling the network, keeping customers and how many rivals share the market. A high EBITDA margin can hide a weak business if the network needs constant heavy investment.

One unit, in numbers: One prepaid mobile subscriber in India for one month: INR 264 comes in, and INR 79 (30%) is left after its own costs.What is left is the unit's contribution, before the costs of the whole company. See the worked example
Typical margin: 15 to 25 percent operating margin (EBITDA margin 30 to 50 percent)Roughly how much of every 100 of sales (or income) is left as profit after the running costs. More on margin
Capital intensity: HighA lot of money must be tied up before the business earns anything, so the return on that money matters as much as the margin. More on capital intensity
The number to watch: ARPU (average revenue per user)Revenue divided by the average number of subscribers, per month. It shows pricing power and the mix of plans.

Ask this first in a case

How many operators are in the market, what are their shares, and how does the regulator behave?

Words used above (4)

ARPU:: Average revenue per user per month.
Prepaid and postpaid:: Paying in advance with top-ups, or paying a monthly bill.
Spectrum:: Radio frequencies an operator licenses from the government to carry mobile signals.
EBITDA:: Earnings before interest, tax, depreciation and amortisation: cash profit before paying for assets.

The industry's other words are explained in Words to know (12).

On this page (17 sections)

How money is made

Monthly mobile plans: prepaid (top up in advance, common in India, Africa and Southeast Asia) or postpaid (a monthly bill, common in Europe, the US and the Gulf).
Home broadband over fibre, cable, copper or fixed wireless access (FWA: broadband over the mobile network to a box at home).
Business services: connectivity, cloud, security and connected devices (IoT) for companies and governments.
Wholesale: renting network capacity to other operators, to mobile virtual network operators (brands that sell mobile plans on another operator's network) and to roaming partners.
Adjacent services such as mobile money and TV bundles; at Safaricom in Kenya, M-Pesa mobile money brings in close to half of service revenue.

Worked example: one unit

Unit economics means the money in and out for one unit of the business. Start from the revenue, take away the unit's own costs, and what is left is its contribution. More on unit economics

The unit: One prepaid mobile subscriber in India for one month. Illustrative, rounded figures.
Line	Amount	ShareShare of revenue
ARPU: average revenue per user per month	INR 264	100%
Minus Network operations, energy and tower rent	INR 58	22%
Minus Licence fees and spectrum charges	INR 21	8%
Minus Interconnection and roaming paid to other networks	INR 10	3.8%
Minus Sales, dealer commissions and marketing	INR 18	6.8%
Minus Staff, IT and billing	INR 12	4.5%
Minus Customer care and other costs	INR 6	2.3%
Minus Network capital spending (5G, fibre backhaul) spread per subscriber	INR 60	23%
What is left (contribution)	INR 79	30%

Check: INR 264 minus INR 185 of costs leaves INR 79.

So what: Before capital spending the subscriber brings INR 139 a month, an EBITDA margin of about 53 percent, but after the network spending only INR 79 is left. Because almost every cost is fixed, ARPU is the lever that moves it most: a 10 percent tariff rise that keeps every customer adds about INR 26 of revenue a month, or about INR 24 after the licence fees that rise with it, close to a third more cash. That is why tariff hikes dominate Indian telecom cases.

Key measures(9)

Key measures (also called KPIs, key performance indicators) are the numbers people in this industry track. Ask for the first one or two early in a case.

ARPU (average revenue per user)
Revenue divided by the average number of subscribers, per month. It shows pricing power and the mix of plans. Glossary: ARPU (average revenue per user)
Typical: about INR 214 to 264 a month at India's two leaders in 2026; US postpaid is billed per account, about USD 148 a month at Verizon[7]
Churn
The share of subscribers who leave each month. Most network costs are fixed, so a lost customer is almost pure lost profit. Glossary: Churn
Typical: below 1 percent a month for US postpaid phones (Verizon consumer: 0.91 percent); prepaid churn is usually several times higher[6]
EBITDA margin
Earnings before interest, tax, depreciation and amortisation, divided by revenue: cash profit before paying for the network.
Typical: about 30 to 50 percent; Bharti Airtel reported about 60 percent for India in April to June 2026, partly because lease accounting rules count most tower rent as depreciation and interest, below EBITDA[7]
Capex to sales (capex intensity)
Capital spending divided by revenue. It shows how much of each unit of revenue goes back into the network. Glossary: Capex to sales (capex intensity)
Typical: about 12 to 20 percent; GSMA expects USD 1.2 trillion of operator capex over 2025 to 2030, roughly 15 percent of revenue[3]
Operating free cash flow
EBITDA minus capex: the cash left for spectrum, interest, tax and shareholders.
Subscribers and net additions
Customers at the end of the period, and new customers minus those who left.
Data use per user
Gigabytes per user per month. It drives how much network capacity must be built.
Typical: about 34 GB a month per Airtel India customer in mid-2026, up 36 percent in a year[7]
Homes passed and take-up rate (fibre)
Homes the fibre network can reach, and the share that actually subscribe. Take-up decides whether a build pays back.
5G share of connections
How many subscriptions run on 5G. It shows how far an upgrade has gone.
Typical: about 3.1 billion 5G subscriptions worldwide after the first quarter of 2026[5]

First questions to ask

When a case lands in this industry, these questions get you to the numbers that matter.

How many operators are in the market, what are their shares, and how does the regulator behave?
What is the mix of prepaid and postpaid, and what are ARPU and churn in each?
What are EBITDA and capex as a share of revenue, and so what is operating free cash flow?
Is the network near full in some places (capacity) or thin elsewhere (coverage)?
How much spectrum do we hold, and when do licences and payments come due?

Value chain: where the margin sits

The value chain is the steps a product or service passes through, from the first supplier to the customer. Each step below shows how much of the value it keeps. More on value chains

Step 1: Spectrum: radio frequencies licensed by the government
Margin varies
Governments and regulators, usually through auctions (for example TRAI and the Department of Telecommunications in India, Ofcom in the UK, the FCC in the US)
A large upfront cost for operators and a source of revenue for the state.
Step 2: Network equipment (radios, antennas, core software)
Medium margin
Ericsson (Sweden), Nokia (Finland), Huawei and ZTE (China), Samsung (Korea)
Sales rise and fall with operators' 5G and fibre build cycles.
Step 3: Towers and passive infrastructure
Fat margin
Tower companies such as American Tower, Indus Towers (India), IHS Towers and Helios Towers (Africa) and TAWAL (Saudi Arabia)
One tower rented to several operators earns strong, steady returns.
Step 4: Fibre, transport and core network
Medium margin
Operators and wholesale fibre companies
Fibre backhaul links towers to the core; demand for it grows with data use.
Step 5: Retail operator: mobile, broadband and business services
Medium margin
Jio, Airtel, Vodafone, e&, stc, Verizon, Singtel and others
Owns the customer and the bill, carries most of the capital spending.
Step 6: Phones and devices
Margin varies
Apple, Samsung, Xiaomi and others, sold directly or through operators
Operators in postpaid markets often subsidise phones to win customers.
Step 7: Apps and content running over the network
Fat margin
WhatsApp, YouTube, Netflix, TikTok and cloud services
They capture much of the value of data traffic without paying for the network, a long-running dispute with operators.

Profit pool: who keeps the money

Where in the value chain the profit ends up, which is often not where most of the sales are. More on profit pools

Tower companies and the few operators in markets with three or fewer strong rivals earn the steadiest returns. Operators in crowded, price-war markets earn little after capital spending. Much of the value of data traffic goes to apps and content that ride on the network without owning it.

Cost structure(7)

The main costs, each as a share of revenue (the money from sales).

Network operations, energy and site rent: about 15 to 25 percent
Sales, marketing, dealer commissions and handset subsidies: about 10 to 20 percent, higher in postpaid markets with phone subsidies
Staff: about 8 to 15 percent
Interconnection and content (fees to other networks, TV rights): about 5 to 15 percent
Spectrum fees and regulatory levies: about 3 to 10 percent, varies a lot by country
EBITDA margin left over: about 30 to 50 percent, higher at some emerging market leaders (Verizon consumer: 43 percent; Airtel India: 60 percent)[6]
Capital spending (capex), paid from EBITDA: about 12 to 20 percent of revenue, more during 5G or fibre builds[3]

Benchmarks(6)

Typical figures for the industry, to check a client's numbers against.

Operating margin before tax, US telecom services: about 20 percent[1]January 2026 data; well below software, because depreciation of networks is large.
Sales per USD 1 of invested capital, US telecom services: about USD 0.6[2]Among the most capital-heavy industries, close to utilities.
Mobile operator revenue worldwide: about USD 1.19 trillion in 2025, forecast USD 1.36 trillion by 2030[3]
People using mobile worldwide: about 5.8 billion in 2025, with over three billion still not using mobile internet[3]
Fibre build cost in the US: median about USD 18 per foot underground and USD 8 per foot on poles[12]
Mobile money share of revenue, Safaricom Kenya: about 46 percent of service revenue in the year to March 2026[14]

Typical cases(7)

Case prompts you might hear in this industry.

Our churn has risen from 1.5 to 2.5 percent a month. How do we reduce it?
Should we raise prepaid prices by 15 percent?
Should we invest in 5G or fibre in this region, and when does it pay back?
Should we sell our towers to a tower company?
Should two operators in this country merge?
Should an operator in Africa or Asia launch mobile money?
Should we launch fixed wireless broadband to compete with fibre?

Common traps(5)

Mistakes candidates make in this industry, and what to do instead.

Judging an operator on EBITDA alone. Always subtract capital spending.
Assuming a price rise keeps every customer. Check whether rivals will follow and how price-sensitive prepaid users are.
Treating prepaid and postpaid the same. Their ARPU, churn and cost to acquire differ a lot.
Treating a tower sale as free money. The operator pays rent for many years afterwards.
Forgetting the regulator, who shapes prices, spectrum costs and whether mergers are allowed.

What changed, 2024 to 2026(5)

Recent changes a case could turn on.

Indian operators raised tariffs in July 2024 (Jio by 12 to 27 percent, Airtel by 10 to 21 percent, Vodafone Idea by 11 to 24 percent), and ARPU kept rising: Airtel reached INR 264 a month in April to June 2026, from INR 250 a year earlier. Further price rises are a common case question.[9]
Europe is consolidating. Vodafone and Three completed their UK merger on 31 May 2025, cutting the number of UK mobile network operators from four to three, and Vodafone has agreed to take full ownership. Merger cases turn on network savings versus the regulator's worry about higher prices.[10]
The European Commission proposed a Digital Networks Act in January 2026 to replace the 2018 telecom code: longer and renewable spectrum licences, more EU-level rules, and national plans to switch off old copper networks by the end of 2035. EU governments and the European Parliament must still agree it.[13]
Phones now connect straight to satellites. T-Mobile US launched T-Satellite with Starlink commercially on 23 July 2025, starting with texting where there is no ground signal; satellites can be a partner for rural coverage or a new rival.[11]
5G passed 3.1 billion subscriptions in early 2026, and GSMA expects 57 percent of mobile connections on 5G by 2030. Operators are still searching for ways to earn more from 5G, such as fixed wireless broadband and business services.[5]

Players by region(7)

Well-known companies in each region. You do not need to learn them by heart; they help you picture the market.

Global: China Mobile
Deutsche Telekom (owns most of T-Mobile US)
Vodafone
America Movil (Claro)
Orange
Europe: Deutsche Telekom
Vodafone and VodafoneThree (UK)
Orange
Telefonica
Telia
Middle East: e& and du (UAE)
stc and Mobily (Saudi Arabia)
Zain (Kuwait and other countries)
Ooredoo (Qatar)
Omantel
India: Reliance Jio
Bharti Airtel
Vodafone Idea
BSNL (state-owned)
Indus Towers (towers)
United States: Verizon
AT&T
T-Mobile US
Comcast and Charter (cable broadband)
Southeast Asia: Singtel (Singapore)
Telkomsel (Indonesia)
Axiata (Malaysia)
Globe and PLDT (Philippines)
Viettel (Vietnam)
Africa: MTN
Airtel Africa
Vodacom
Safaricom (Kenya, M-Pesa)

Words to know(12)

Linked words have a fuller entry in the glossary.

ARPU (glossary entry): Average revenue per user per month.
Churn (glossary entry): The share of subscribers who leave in a month.
Prepaid and postpaid: Paying in advance with top-ups, or paying a monthly bill.
Spectrum (glossary entry): Radio frequencies an operator licenses from the government to carry mobile signals.
Tower company: A firm that owns towers and rents space on them to several operators.
Backhaul: The links, often fibre, that carry traffic from towers to the core network.
FWA: Fixed wireless access: home broadband delivered over the mobile network.
EBITDA (glossary entry): Earnings before interest, tax, depreciation and amortisation: cash profit before paying for assets.
Capex intensity (glossary entry): Capital spending divided by revenue.
Operating free cash flow: EBITDA minus capital spending.
Take-up rate (glossary entry): The share of homes passed by a network that actually subscribe.
Number portability: Keeping your phone number when you switch operator, which makes switching easier.

Business model patterns

The ways of making money this industry follows. Spot the pattern in a new industry and you already know the first questions to ask.

Sources(14)

Facts checked on 30 September 2026. Worked examples are illustrative, shaped by these sources rather than one company's figures.

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Same pattern elsewhere

Industries that make money in a similar way. What you learned here carries over.