The first mobile operators have already reached the tipping point where handset revenue exceeds service revenue. The only reason why the average handset revenue isn’t higher than 14% of total revenue is subsidisation: Handset cost averagely stands for 30% of operator OPEX.

The increase in handset sales is bad news for the EBITDA margin of operators. Even with a positive gross margin on handset sales, total EBITDA margin is diluted. The issue is deeper than handset subsidisation: Even when at its best, handset retail is a low margin business. Should operators opt-out?

Download analysis: tefficient public efficiency analysis 3 2013 Handset sales