When Patrick Drahi revived the sale of a stake in a German fibre community this month, the headlines centered on acquainted themes. Excessive leverage typical of the sector and asset disposals, reflecting a big debt place constructed throughout a decade of unusually low cost capital.
It’s a narrative that matches comfortably with how European telecoms is usually described, as an trade formed by capital depth, lengthy funding cycles and sophisticated steadiness sheets.
But, this concentrate on possession and steadiness sheets hides an usually forgotten actuality: telecom networks don’t generate income just by present. Fibre within the floor and spectrum within the air solely change into worthwhile by a dense industrial layer that sits between operators and prospects. Gross sales platforms, distribution companions, name centres, and buyer acquisition engines are what flip capital funding into money movement. This equipment is never mentioned, regardless of being decisive in whether or not telecom methods succeed.
The industrial layer that determines profitability
The size of this layer will not be marginal. Analysys Mason estimates that buyer acquisition and retention prices account for 15 to 25 p.c of working expenditure for European telecom operators. In aggressive markets corresponding to Sweden, the UK, and the Netherlands, annual churn charges for cell prospects routinely exceed 20 p.c. Underneath these circumstances, profitability relies upon much less on community protection than on how effectively providers are bought, retained, and serviced.
Jason Grannum and the execution hole
That is the place a distinct form of telecom entrepreneur operates. Jason Grannum constructed his profession in Sweden not by proudly owning networks or bidding for spectrum, however by constructing and scaling gross sales and distribution companies embedded within the trade’s industrial infrastructure, attaining important industrial scale in certainly one of Europe’s best markets.
Working as a cell digital community operator through a licensed associate, his companies delivered totally branded providers whereas counting on Tele2, certainly one of Sweden’s main telecommunications firms, for nationwide community protection and efficiency. The association illustrates how worth in mature telecom markets is usually created with out asset possession, by execution at scale. Recruitment, incentives, compliance, and efficiency monitoring had been handled not as overhead, however as core strategic levers, managed with the self-discipline sometimes related to established operators moderately than entrepreneurial start-ups.
Over time, this execution-led mannequin grew to become repeatable. Grannum has gone on to co-build a number of companies inside the similar industrial layer of the telecom ecosystem, working intently with giant operators and controlled companions. In markets outlined by skinny margins and fixed churn, that form of sturdiness is itself a marker of strategic relevance.
Connectivity doesn’t assure returns
Sweden provides a helpful illustration of why this issues. It ranks amongst Europe’s most related international locations, with fibre-to-the-home protection above 80 p.c and a number of the highest cell information utilization charges within the EU. On the similar time, common income per consumer stays comparatively low. In accordance with the Swedish Put up and Telecom Authority, ARPU ranges lag behind these of Germany and France. For operators, profitability subsequently hinges on operational effectivity moderately than pricing energy.
On this atmosphere, gross sales execution turns into important. Name centre productiveness, adherence to shopper safety guidelines, and employees retention instantly have an effect on margins. A poorly managed distribution channel can erase good points achieved by community optimisation. Conversely, a disciplined gross sales operation can maintain revenues even when subscriber progress slows.
The boardroom blind spot
This operational actuality usually sits uncomfortably with how telecom management is structured. Analysis by McKinsey exhibits that senior executives commit disproportionate consideration to capital allocation and regulatory technique, whereas frontline gross sales and repair efficiency is delegated downward or outsourced. The result’s a persistent hole between boardroom priorities and buyer expertise. That hole tends to widen in giant, leveraged teams the place refinancing and restructuring dominate administration agendas.
Entrepreneur-led fashions differ much less in ambition than in construction. Gross sales operations are tightly managed, prices are tracked in actual time, and frontline efficiency feeds instantly into strategic choices. This operational proximity will not be a stylistic choice however a response to markets the place competitors is intense and pricing headroom is restricted.
Classes from disruption past pricing
A distinct however associated lesson could be drawn from Xavier Niel, whose disruption of the French market is usually attributed to pricing alone. But Free Cell’s influence rested as a lot on industrial execution as on low tariffs. Lean distribution, simplified provides, aggressive buyer acquisition, and an early embrace of on-line gross sales allowed the corporate to scale quickly with out the overheads that burdened historic gamers. Community funding mattered, but it surely was the gross sales mannequin that translated that funding into market share.
Take-up charges lag
Throughout Europe, comparable patterns emerge. Within the UK, cell digital community operators now account for greater than 15 p.c of cell connections, in accordance with Ofcom. These firms personal no infrastructure. Their competitiveness rests virtually fully on distribution partnerships and customer support effectivity. In fibre markets, take-up charges nonetheless lag protection by extensive margins. Throughout the EU39 area, solely about 53 p.c of houses handed with FTTH/B are literally related, despite the fact that protection has reached roughly 75 p.c. In some international locations, the hole is way wider: France studies take-up close to 78 p.c as soon as fibre is offered, whereas Germany and Italy stay close to 25 p.c. These variations level to how gross sales execution and
buyer migration methods matter as a lot as bodily rollout
When infrastructure underperforms
These dynamics change into particularly seen when initiatives underperform. Drahi’s German fibre enterprise, OXG Glasfaser, has up to now reached round 500,000 houses out of a deliberate 7 million. Whereas deployment challenges play a job, uptake additionally will depend on how successfully providers are marketed and bought on the native stage. Infrastructure alone doesn’t assure adoption.
Customer support compounds the difficulty. The European Fee estimates that dissatisfaction-driven switching imposes billions of euros in oblique prices on the telecom sector annually. Poor service will increase churn, raises acquisition prices, and erodes long-term returns. These losses not often characteristic prominently in investor displays, but they materially have an effect on valuations.
Automation isn’t a silver bullet
Automation and synthetic intelligence are sometimes offered as cures. AI-driven buyer help guarantees effectivity good points, however proof suggests limits. Gartner analysis has repeatedly proven that deploying AI in customer support delivers restricted good points except frontline processes and working fashions are redesigned alongside it. Expertise amplified present strengths or weaknesses moderately than correcting them.
Entrepreneurs grounded in gross sales and distribution are likely to strategy automation pragmatically. AI is used to help brokers moderately than exchange judgement. Knowledge informs coaching moderately than serving as a blunt disciplinary instrument. This displays an understanding that buyer relationships are fragile, and that short-term effectivity good points can create long-term harm if mishandled.
The forgotten human value
There’s additionally a labour dimension that is still underappreciated. Gross sales and customer support platforms make use of a whole bunch of hundreds throughout Europe. In accordance with Eurofound, these roles have among the many highest turnover charges within the providers sector. Retention methods are subsequently not solely social issues, however financial ones. Changing a single name centre agent can value a number of thousand euros as soon as recruitment and coaching are factored in.
As European telecoms confront greater rates of interest and slower progress, consideration will proceed to concentrate on debt discount and asset gross sales. That focus is comprehensible. However it dangers lacking an vital level. The sector’s long-term well being relies upon as a lot on how networks are bought and serviced as on who owns them. Fibre and spectrum might dominate headlines, however execution occurs elsewhere, in locations that not often entice public consideration.
