Technology | Media | Telecommunications

Friday, November 29, 2019

Global Outlook for Telecommunications Services Growth

Traditional telecom service providers and mobile network operators have many challenges that impact their ability to generate new growth. That said, the situation is more problematic for those companies that had also invested in legacy pay-TV business models. Looking ahead, the next few years are likely to be confounding.

Worldwide spending on telecom services and pay-TV services will reach $1,633 billion in 2019, and that's an increase of 0.8 percent year-on-year, according to the latest market study by International Data Corporation (IDC).

Furthermore, IDC forecasts that those same services will reach $1,647 billion in 2020, representing an increase of just 0.9 percent. Given that assessment, the senior executives that lead these companies will seek ways to change the status quo and transform their business model.

Telecommunications Market Development

Mobile communications remain the largest segment of the market, accounting for 52.8 percent of the total in 2019. The mobile market is set to post a compound annual growth rate (CAGR) of 1.3 percent over the 2019-2023 period.

That modest growth will be driven by the increase in mobile data usage and machine to machine (M2M) applications, which is offsetting the ongoing declines in spending on mobile voice and messaging services.

Fixed data service spending represents 21.7 percent of the total market in 2019, with an expected CAGR of 3.3 percent, driven by the need for higher bandwidth services.

Spending on fixed voice services will post a CAGR of negative 4.8 percent over the forecast period and will represent only 8.5 percent of the total market by 2023. However, rapidly declining TDM voice revenues are not being offset by the increase in IP voice.


On a geographical basis, the Americas was the largest services market, with revenues of $630 billion in 2019, driven by the large North American sector.

Asia Pacific was the second largest region, followed by Europe, the Middle East, and Africa (EMEA).

The markets with the fastest year-on-year growth in 2019 were EMEA, driven mainly by emerging markets, followed by the Americas.

The introduction of 5G, the latest technology to reach the global telecommunications market, has recently begun to make an impact. The promise of improved wireless network architectures, data transmission speeds, and enhanced services should help to remake the mobile service landscape.

This transition to 5G technology has already been launched in the more advanced markets -- such as Korea, the United States., UK, Germany, and China. According to the latest IDC forecast, the total number of mobile 5G subscriptions will surpass one billion by 2023.

Outlook for Telecom Service Revenue Growth

"By introducing extremely high speeds and ultra-reliable low latency, 5G will create the infrastructural foundation for a smarter and even more connected world," said Kresimir Alic, research director at IDC. "It will also generate new opportunities for telecom services operators."

More than ever before, these companies will be expected to create, innovate, and educate -- essentially becoming leaders of a global digital revolution. But challenges remain for the CEOs that must lead their organizations through the next wave of unanticipated market disruptions.

They need the vision of a savvy CMO that can drive growth. They'll also want CIOs and CTOs that have the foresight to anticipate the need to reduce operational costs by adopting more open-source hardware and software that can enable improved financial performance -- in particular, forward-looking revenue and profit projections.