'Reinvention' urged for European telecoms. (Business Briefs).

Struggling European telecommunications companies need to reinvent themselves and cannot count on an economic upturn to resolve deep-seated structural problems, say consultants at Mercer Management Consulting.

Mercer based its study on 25 key firms, including giants like Nokia Corp. and Ericsson, representing about half of the global telecommunications market. The firm found a major paradox: Despite a record number of bankruptcies in recent months, profit warnings and disappointing results, volume demand for key services like Internet access, cell phone acquisitions and subscriptions to multi-channel packages have actually equalled or surpassed forecasts.

Mercer telecom consultants in Paris argue that the industry's troubles have been largely the result of "me-too" strategies. "Deregulation, the wildfire growth of some segments (cell phones, Internet data) and overvaluation by analysts combined to pull companies into a breakneck race to be among tomorrow's winners," says Nicholas Teisseyre, a Mercer vice president. "In doing so, they focused primarily on speed, and they all designed easily reproducible strategies without really trying to innovate and differentiate themselves."

While the telecom markets worldwide have been in a prolonged slump, potential growth sources include information processing services and DSL voice features, Mercer maintains--provided companies can create new models and brand extensions. To do that, the company says, telecom firms should look at mature industries like airlines, mass-market retailing, autos and banking to see how successful companies have challenged the status quo.