Is the MTR cash cow finally becoming extinct?

April 2014

After much equivocation, pushing, shoving and stamping of feet between European mobile operators and regulators, should we put the Mobile Termination Rates cash cow on the endangered species list?

HOT TELECOM has been following Mobile Termination Rates (MTR) in Europe and around the world for 8 years now and the industry has come a long way since then. In 2006, it was not uncommon to see MTRs in Europe set at over US$0.20/minute, while now the majority hover at around the Long-Run Average Incremental Cost (LRIC) of US$0.015. This drop represents a staggering 93% decrease during that period. If we take Italy for example, in 2006, some of its peak MTRs were set as high as US$0.289/minute compared with US$0.014/minute in 2014.

We have seen increasing pressures on MTRs in the last few years with an average yearly decrease of between 30-40% in 2011, 2012 and 2013. This compared to an average yearly decrease between 10-15% in 2008, 2009 and 2010.

So we can safely say that the years of the MTR cash cow are almost over, with 63% of the 30 European countries we follow in our report having now set their MTRs below US$0.02/minute. The winner of the race is Malta, having recently reduced its MTRs by over 80% and now boasts by far the region's lowest MTR - set at US$0.005/minute.

Nevertheless, countries such as Switzerland and Slovenia still enjoyed MTRs as high as US$.082/minute and US$0.045/minute respectively in April 2014. And at least in the case of Switzerland, there is no decrease in sight.

So it is clear that the days of a significant income from incoming national calls are over and mobile operators in the region have had to finally come to terms with that. Nevertheless, where there is life there is hope and mobile operators in the region are now turning towards International termination rates to replace lost revenue on their national markets. In early 2014, we have seen European mobile operators distinguish between European originating traffic and International originating traffic, increasing their International termination rates to mirror what they have to pay when they send traffic to an international destination.

For example, some of the European mobile operators have added a surcharge of US$0.10/minute for some traffic originating outside of Europe, while others have added a surcharge of only US$0.01/minute. Some operators are excluding traffic from the US (where termination rates to mobile destinations are very low) but this is very much a moveable feast that is putting much strain on the rating and billing systems of international wholesalers. Time will tell if this trend will catch-on and if mobile operators will be able to replace the national MTR cash cow with something new.

Find out more about MTRs in Europe with our quarterly update report:

This report provides detailed fixed to mobile termination rates on an operator-by-operator basis for each Western and Eastern European countries. It highlights the planned rate decreases for the coming months and provides a benchmarking analysis and historic rates from 2009 to 2014 by country.

For more information on this report, please contact Isabelle Paradis at: or +1 514 270 1636