The performance analysis of infrastructure service industry

Abstract

This Master’s Thesis is an assignment within Aappo Kontu’s doctoral studies in searching for sustainable competitive advantages and enablers of the infrastructure service industry. The infrastructure service industry was established in the beginning of the millennium when telecommunication operators and electricity companies outsourced building and maintenance of their infrastructure. The sustainable competitive advantage of recently established industry has not been studied thoroughly during the past years and this research creates a baseline for the overall study. This thesis aims to identify how the infrastructure service companies have performed and what has impacted on their performance in 2006-2016.

Through understanding competitiveness, competitive advantage, competitive strategies, firm resources, industry forces and macro environment, a high-level theoretical framework was created to understand what impacts on competitive advantage and how it is measured. The thesis was carried out as a combination of quantitative and qualitative research methods to understand the financial performance of eleven infrastructure service companies based on financial data as well as the impacts on their financial performance based on public company reports.

As a result, the overall industry has grown during the studied years due to increase in outsourcing services and customer investments, as well as high number of mergers and acquisitions and expanding service offering. However, simultaneously the growth rate of the industry has decreased because of fierce competition in the industry and divestments of businesses and lower number of mergers and acquisitions. The profitability of the industry has decreased and fluctuated as the industry has fiercely competed with prices, new entrants have entered the industry, customer’s strong power of bargaining, poor project management and fluctuation in raw material prices. Additionally, the study identified macro environment, industry, firm internal factors that have impacted on the performance of the industry.