The Exane BNP Paribas-Arthur D. Little joint annual report on European telecom operators highlights the challenges and opportunities facing the industry. Core telco revenues are expected to decline by 1.8% annually until 2015, and over-the-top services pose a major threat to mobile but an opportunity for fixed-line. Diversification into adjacent markets can add significant revenues, but not enough to stabilize the top-line. The report also identifies big opportunities to transform costs and suggests that telcos will make different strategic choices depending on whether they are a mega-operator, a local hero, or an infrastructure play. The report was prepared by meeting with 105 organizations in the telecom-media-technology arena and beyond across 15 countries.