Mobile sector rediscovers its form

A slew of mobile operators in Europe and North America have reported bumper results today, with rumours of an upturn in handsets circulating to boot.

Mobile giants Telefónica, France Telecom and Verizon - owner of Verizon Wireless along with Vodafone - have all turned in juicy profits despite a less than rosy economic outlook.

Verizon, the US's largest phone company, announced it has beaten expectations for the second quarter, with a net profit which reached $338m - up significantly from the $2.1bn loss that it posted a year ago.

Despite the Verizon's move from the red, its share price slipped as the company speculated there may be some lean times ahead for the coming year: the telco is facing a prolonged labour dispute and a pension fund that needs some heavy duty topping up.

Across the water, France Telecom - parent of Orange - must be feeling equally pleased with itself, having seen its restructuring plan bear financial fruit less than a year after bankruptcy had seemed a distinct possibility.

The company has reported an operating profit of €4.6bn for the first half and has even managed to generate a small rise in sales - up 1.7 per cent to €22.9bn.

Telefónica, Spain's biggest phone company, also turned loss into profit, with a first half net income of €1.43bn, a turnaround from last year's deficit of €5.58bn - growth which the company attributes to the success of its mobile arm.

On the hardware horizon, manufacturers – including Alcatel, Nokia and TI – are cautiously predicting an end to the sales slump that has dogged telecoms equipment for some time, as signs emerge that the industry is putting the knives away after a period of heavy cuts in spending.

Will the boom time continue for the telcos? Neale Anderson, analyst at Ovum, thinks it may not. "It's hard to see it continuing. Regulators are now taking an interest in roaming fees, which have been a cash cow for the mobile companies, giving them a disproportionate share of operator-to-operator revenue," he said.

In the future, Anderson also believes the structure of the crowded mobile market will change, with more consolidation occurring. "We expect to see more proactive and positive mergers happening," he said.