The CAPEX-to-SALES TRAP

Matthias Pohler () and Jens Grübling
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Matthias Pohler: Dresden University of Technology
Jens Grübling: Dresden University of Technology

A chapter in Governance of Communication Networks, 2006, pp 439-458 from Springer

Abstract: Abstract The traditional advantages of the former European (telecommunication) incumbents include neglecting risks, low volatility and a steady growth path with reasonable profitability. Through deregulation and liberalisation of the telecommunications market, the risk and volatility influencing parameters have changed fundamentally. This paper analyses the changes of the market, after the period of major governmental regulations, from January 1999 to June 2003 — and addresses hereby the significant investment shift of major European integrated and cellular operators which results in the CAPEX-to-SALES TRAP or in other words encumbrance and profitability crises. Using market based performance figures, volatility and risk measures we show the success (failure) of the investment strategies of the European telecommunication industry.

Keywords: Capital Market; Investment Strategy; Mobile Operator; Capital Expenditure; Investment Behaviour (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-7908-1746-1_23

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DOI: 10.1007/3-7908-1746-5_23

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