Logica, which derives a large proportion of its revenues from the sale of SMS and prepay products to telecommunications suppliers, said network operators were risking the quality of text-messaging services by putting off upgrades. "This is causing service level degradation in some networks and we believe that traffic in some operators' systems is close to current messaging capacity," Logica said.
The British-based company issued the warning when announcing overnight that its telecommunications revenues had fallen by 20 per cent for the financial year ended 30 June over the previous year. In the mobile networking sector alone, revenues fell 16 per cent over the previous year, due largely to a drop-off in sales of SMS infrastructure.
Logica said spending cuts by debt-laden mobile phone network operators meant they would soon be unable to cope with text-messaging traffic. The cuts also threatened to delay the appearance of picture-messaging services.
"Mobile networks faced the toughest trading environment for a decade and revenues fell as heavily indebted operators all but cancelled capital expenditure as the year progressed," the company said.
Logica sells messaging and prepay services to more than 160 customers worldwide.
In what may be a sign of future difficulties for mobile phone users,
The company also cast doubt on the immediate future of Multimedia Messaging (MMS), which is being introduced by network operators such as T-Mobile and O2, and is being built into some new handsets from Nokia, Sony, Ericsson and others.
While operators are counting on MMS to boost revenues, they are reluctant to invest in rolling services out, Logica said: "Few operators have launched MMS services, and many tier two and tier three operators have deferred decisions following trials, as availability of handsets, and an as yet indifferent consumer experience, delays launches."
Logica also said revenues had been hit directly by the decisions of some network operators to postpone or cancel introductions of 3G services.
