When the going gets tough, the tough switch off their mobile phones.As the world faces its severest economic crisis of the wireless era, there are signs that European and emerging-market spending on mobile-phone calls is more discretionary than operators were anticipating.
The shares of predominantly wireless businesses, such as Vodafone Group, or those with a big emerging-market wireless presence, such as Telenor, have underperformed the European sector the past three months 8% and 35%, respectively. Telecom as a whole has outperformed the European market 10%, but that may not last.
So far this quarter, Deutsche Telekom's T-Mobile division reported 6% and 2% drops in revenue from a year earlier in the U.K. and Germany, respectively. Vodafone surprised markets with a 2.5% decline in Spanish revenue in the second quarter.
France, with one of Europe's stronger economies and a less competitive mobile market, has seen a slowdown.
Vodafone and Spain's Telefonica, which report earnings this week, have big investments in emerging markets such as India and Latin America. Their home markets of the U.K. and Spain are sure to be weak. But demand outside Europe looks pretty slack, too.
Other companies have provided clues. Reliance and Idea in India, America Movil in South America, and China Unicom have all come out with poor numbers.
With recent falls in emerging-market currencies also set to affect profits for the likes of Vodafone and Telefonica, there is plenty of room for disappointment.
