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The benchmarks that define a good operator
# The benchmarks that define a good operator
A Verizon investor and a Vodafone investor are looking at the same industry through two different lenses: one sees 2% churn as normal, the other would consider it a crisis. Neither is wrong. Telecom benchmarks are regional, and knowing which number belongs to which market is what separates sector fluency from guesswork.
This lesson gives you the vocabulary, the current-year (2026) ballpark figures, and the quick math professionals actually run when they size up an operator.
The market, in size
Two numbers anchor everything else:
US telecom services market: roughly $500 billion in annual revenue across wireless and wireline, estimate, dominated by three national carriers: Verizon, AT&T, T-Mobile.
European telecom market: roughly €230 to €250 billion in annual revenue, estimate, but fragmented across 27+ national markets and dozens of operators (Deutsche Telekom, Orange, Telefónica, Vodafone, plus a long tail of challengers like Iliad, 1&1, and mobile virtual network operators).
That fragmentation is the single most important structural fact in European telecom. The US has three and a half national mobile players; a country like Italy alone has four. Fewer players usually means more pricing power, which is why US wireless margins tend to run higher than European ones. This is a market-structure story, not a management-quality story, so don't compare a German operator's margin to Verizon's and conclude German management is worse.
Vocabulary and acronyms, defined once
ARPU (Average Revenue Per User)
: monthly revenue divided by subscriber count. The single most quoted per-customer metric.
Churn rateChurn rateChurn rate is the percentage of customers or revenue lost over a period. It measures how fast a business loses its existing customer base.View full definition →: the percentage of subscribers who leave in a given period, usually monthly. Postpaid churn (contract customers) is the quality benchmark; prepaid churn is structurally much higher and less meaningful.
EBITDA margin: earnings before interest, tax, depreciation, and amortization, as a percentage of revenue. Telecom's preferred profitability yardstick because the business is capital-intensive and EBITDAEBITDAEBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures a company's operating profitability before financing and accounting decisions, used to compare core performance across firms.View full definition → strips out the depreciation noise from all that network spending.
Capex-to-revenue ratio (capex intensity): capital expenditurecapital expenditureCapital Expenditure (CapEx) is money spent to acquire, upgrade, or extend long-lived assets like equipment, property, or software that deliver value over multiple years.View full definition → divided by revenue. Tells you how much of every dollar of sales is being poured back into fiber, towers, and spectrum.
ARPA (Average Revenue Per Account): like ARPU but per household or business account, common when a bundle covers multiple lines.
FCF (Free Cash Flow): cash left after capexcapexCapital Expenditure (CapEx) is money spent to acquire, upgrade, or extend long-lived assets like equipment, property, or software that deliver value over multiple years.View full definition →, the number that actually funds dividends and buybacks.
MVNO (Mobile Virtual Network Operator): a company that sells mobile service without owning network infrastructure, renting capacity from a host operator (e.g., Mint Mobile running on T-Mobile's network).
FTTH (Fiber to the Home): fiber optic cable run all the way to the customer's premises, the current gold-standard broadband technology, as opposed to older copper or cable-hybrid networks.
Spectrum: the licensed radio frequencies operators use for mobile signals, allocated by regulators (FCC in the US, national regulators plus BEREC coordination in the EU) usually via auction.
ARPU dilution: when average revenue per user falls because new subscribers (often on cheaper plans or bundles) pull the average down.
This year's topline benchmarks (2026, estimates)
Numbers below are commonly cited ranges, always treat them as estimates and cross-check against operator earnings releases.
| Metric | US benchmark | Europe benchmark |
|---|---|---|
| Postpaid mobile churn (monthly) | ~0.7 to 1.0% | ~1.0 to 1.5% |
| Mobile ARPU (monthly, blended) | ~$45 to $55 | ~€15 to €20 |
| EBITDAEBITDAEBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures a company's operating profitability before financing and accounting decisions, used to compare core performance across firms.View full definition → margin (integrated telco) | ~35 to 40% | ~30 to 35% |
| CapexCapexCapital Expenditure (CapEx) is money spent to acquire, upgrade, or extend long-lived assets like equipment, property, or software that deliver value over multiple years.View full definition →-to-revenue | ~15 to 18% | ~15 to 20% |
| Fixed broadband penetration growth | low single digits, mature | still climbing in fiber build-out markets |
The gap in ARPU is the headline: US ARPU is roughly double or triple Europe's, largely because of the market concentration point above, plus a US regulatory environment historically more tolerant of consolidation. Meanwhile European capexcapexCapital Expenditure (CapEx) is money spent to acquire, upgrade, or extend long-lived assets like equipment, property, or software that deliver value over multiple years.View full definition → intensity can run just as high or higher, because many countries are still mid-build on nationwide fiber rollout, a multi-year infrastructure cycle the US mostly completed earlier for cable, and is now redoing for fiber overbuild.
For primary source checking, operator quarterly reports and investor decks (Verizon, Deutsche Telekom, Vodafone) are freely available, and aggregated regulatory data is published by the FCC and Europe's telecom regulators body BEREC.
The calculations professionals actually run
1. Back-of-envelope ARPU check.
Revenue ÷ average subscribers ÷ 12 months = monthly ARPU.
Example: an operator reports $12 billion annual mobile service revenue and 22 million subscribers.
$12,000,000,000 ÷ 22,000,000 = $545 per year ÷ 12 = ~$45/month ARPU.
Compare that to the ~$45 to $55 US benchmark: this operator is mid-pack, not a standout.
2. Churn-to-CAC sanity check.
If monthly churn is 1.5% and average customer lifetime valuecustomer lifetime valueLifetime Value: the total revenue (or profit) a customer generates throughout their entire relationship with your business.View full definition → doesn't clear the CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.View full definition → (customer acquisition costcustomer acquisition costCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.View full definition →, what it costs in marketing and subsidy to win a subscriber) within a reasonable number of months, the growth is unprofitable. Rough tenure = 1 ÷ monthly churn ratechurn rateChurn rate is the percentage of customers or revenue lost over a period. It measures how fast a business loses its existing customer base.View full definition →. At 1.5% churn, average tenure is about 67 months (1 ÷ 0.015). At 3% churn, it drops to 33 months. Halving the churn ratechurn rateChurn rate is the percentage of customers or revenue lost over a period. It measures how fast a business loses its existing customer base.View full definition → roughly doubles how long you have to earn back your acquisition spend.
3. Capex intensity trend.
Falling capexcapexCapital Expenditure (CapEx) is money spent to acquire, upgrade, or extend long-lived assets like equipment, property, or software that deliver value over multiple years.View full definition →-to-revenue after a multi-year fiber build usually signals the investment cycle maturing, good for free cash flowfree cash flowFree Cash Flow is the cash a company generates from operations after funding the capital expenditures needed to maintain and grow its asset base.View full definition →. Rising capexcapexCapital Expenditure (CapEx) is money spent to acquire, upgrade, or extend long-lived assets like equipment, property, or software that deliver value over multiple years.View full definition →-to-revenue with flat revenue is a warning sign: money is going into the network but not yet converting to growth.
Knowledge check
1. A German operator reports a lower EBITDA margin than Verizon. What is the most sound conclusion?
2. Why is postpaid churn considered a more meaningful quality benchmark than prepaid churn?
3. An investor familiar only with the US market says a European operator's 2% monthly churn rate is alarming. What key context are they missing?
MULTIPLE CHOICE
4. Select ALL correct answers about the structural difference between the US and European telecom markets.
Select all the correct answers.
MULTIPLE CHOICE
5. Select ALL correct answers about ARPU and churn as metrics for evaluating an operator.
Select all the correct answers.
Due diligence: what to actually check
If you're assessing an operator, whether as an investor, partner, or new hire trying to understand your employer, run these checks:
Postpaid vs. prepaid mix. A headline churn number that blends both can hide a deteriorating postpaid base behind a stable prepaid one.
ARPU trend, not just level. Rising ARPU from price increases is different from rising ARPU from upselling 5G or fiber tiers; the latter is stickier.
Net debt to EBITDA. Telecom carries structurally high debt because of network capexcapexCapital Expenditure (CapEx) is money spent to acquire, upgrade, or extend long-lived assets like equipment, property, or software that deliver value over multiple years.View full definition →; a ratio comfortably under 3x is generally considered healthy, above 4 to 5x invites scrutiny, especially as interest rates move.
Spectrum and license position. Check whether key spectrum licenses are up for renewal soon and what that could cost at auction.
Regulatory exposure. Roaming rules, net neutrality status, merger review posture (US: FCC and DOJ; EU: European Commission plus national regulators), and any open antitrust matters.
Fiber and 5G coverage claims vs. actual take-up. A network passing 20 million homes with fiber means little if only 30% have signed up (the "penetration rate").
🎬 [VIDEO: "How the Telecom Industry Actually Makes Money" - youtube.com - search for recent explainer content from established finance/business channels covering telecom business models, capexcapexCapital Expenditure (CapEx) is money spent to acquire, upgrade, or extend long-lived assets like equipment, property, or software that deliver value over multiple years.View full definition → cycles, and ARPU economics]
Key Takeaways
US telecom is a concentrated, high-ARPU, high-margin market (three-plus national players); Europe is fragmented, lower-ARPU, and still mid-cycle on fiber capexcapexCapital Expenditure (CapEx) is money spent to acquire, upgrade, or extend long-lived assets like equipment, property, or software that deliver value over multiple years.View full definition →, so never compare margins across regions without adjusting for structure.
Core vocabulary to own cold: ARPU, churn, EBITDAEBITDAEBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures a company's operating profitability before financing and accounting decisions, used to compare core performance across firms.View full definition → margin, capexcapex-to-revenue, MVNO, FTTH, spectrum. These are the words that appear in every earnings call.
Capital Expenditure (CapEx) is money spent to acquire, upgrade, or extend long-lived assets like equipment, property, or software that deliver value over multiple years.
2026 estimates to anchor conversations: US mobile ARPU roughly $45 to $55/month vs. Europe roughly €15 to €20; postpaid churn roughly 0.7 to 1% (US) vs. 1 to 1.5% (Europe); EBITDAEBITDAEBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures a company's operating profitability before financing and accounting decisions, used to compare core performance across firms.View full definition → margins roughly 35 to 40% (US) vs. 30 to 35% (Europe).
Two calculations to keep in your back pocket: ARPU = revenue ÷ subscribers ÷ 12, and average customer tenure ≈ 1 ÷ monthly churn ratechurn rateChurn rate is the percentage of customers or revenue lost over a period. It measures how fast a business loses its existing customer base.View full definition →.
Due diligence beyond the headline numbers: check postpaid/prepaid mix, ARPU trend quality, net debt to EBITDAEBITDAEBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures a company's operating profitability before financing and accounting decisions, used to compare core performance across firms.View full definition →, spectrum renewal exposure, and actual fiber/5G penetration versus coverage claims.