Monday, December 05, 2005

Whose pockets are the deepest?

In discussions I've had over whether the teleco's are going to weather the current cat 5 hurricane that is pummeling the incumbent telephone industry, an oft quoted reason why the telcos will survive is the depth of their pockets.

But how deep are they really? How do they compare the mortal enemies of the telcos?

A close of business today Vodafone' market cap was ~US$139 billion, Deutsch Telecom's market cap was ~US$72 billion, Bellsouth's market cap was ~US$51 billion, AT&T (SBC)'s market cap was ~US$99 and Telefonica's market cap was at ~US$73 billion. A grand total of ~US$434 billion

A close of business today Google's market cap was ~US$120 billion, Microsoft's market cap was ~US$295 billion, Yahoo!'s market cap was ~US$50 billion, eBay stood at ~US$62 billion and IBM at ~US$139 billion. A grand total of ~$US666 billion.

While market cap is not a scientifically rigorous measure of measure of pocket size nor cash flow it serves to illustrate the point. The telco's playing a team that masses half again their size. A team with a better cash flow than the telcos going on their last reports.

Unfortunetly for the telcos the other team isn't playing a game of my hardware is better than yours. Instead they are playing my services are more useful than yours. A game the telcos' aren't that good at playing. The rules have changed and the old ways and old business models aren't working. Sadly, few of the telcos seem to realise this and insist on playing by the old rules.

Link: James Enck's Eurotelco Blog covers the gory details for the European telecommunications industry very well. James Enck gives some results on the hemorrhaging that all the European telcos are facing.

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