Emerging markets, mobile data to drive telco revenues

Some bright spots for growth in telecoms revenue are emerging from the gloom of the global economic crisis, but there is no question that service providers will struggle to drive growth in traditional revenue streams in the next few years. Looking to new strategies and new business models is critical to survival and growth.
Telecoms is still a growth industry in most regions of the world, particularly for the mobile sector, and assessing market perspectives and quantifying growth opportunities will be critical to carving out a piece of the revenue growth over the next five years.
China, India and Brazil present greatest opportunities
According to Analysys Mason's forecast report, Global telecoms market: trends and forecasts 2013–2017, the global market for telecoms services generated retail revenue of $1.54 trillion (€1.1 trillion) in 2012, of which around two-thirds was from developed markets – North America (NA), Western Europe (WE), Central and Eastern Europe (CEE) and Developed Asia–Pacific (DVAP) – and around one-third from emerging markets – Emerging Asia–Pacific (EMAP), Latin America (LATAM), Middle East and North Africa (MENA), and Sub-Saharan Africa (SSA).
The USA was the largest market ($378 billion), followed by China ($151 billion), Japan ($133 billion), Brazil ($61 billion) and Germany ($53 billion).
We forecast that telecoms retail revenue worldwide will grow at a 1.7% CAGR during 2012 to 2017, with growth in mobile (3.2%) more than offsetting a decline in fixed (–0.6%).
Mobile handset data and fixed and mobile broadband will be the most important revenue growth areas, driven by higher data usage and increased penetration of smartphones and broadband services. However, we forecast that mobile voice revenue will grow in emerging markets because many countries still have unserved customers.
Revenue in emerging markets will grow at a CAGR of 5.3% during 2012 to 2017, which will more than offset the decline in WE (–1.3%), while revenue will be nearly stable in CEE (–0.2%), DVAP (–0.3%) and NA (+0.2%).
Around two-thirds of global revenue growth will come from Emerging Asia–Pacific, and around 20% from Latin America (see Figure 1). Three countries will account for about 60% of global revenue growth – China (40%), India (12%) and Brazil (8%).
Revenue growth prospects vary dramatically by region
In developed markets, the revenue mix is changing in line with the evolution of consumer behavior, and the greatest growth opportunity will come from mobile handset data. We forecast that smartphones will account for around 84% of total mobile handsets in DVAP in 2017, and about 75% in NA and WE. In the enterprise segment, M2M and cloud are gaining momentum but their market share of total retail revenue is still small compared with core services.
In emerging markets, telecoms operators will continue to benefit from the growth of mobile penetration and rising GDP per capita that will increase telecoms service spending in all four regions. Improved mobile connectivity will also stimulate usage of data services, but mobile voice will remain predominant (45% share of total retail revenue in 2017) because fixed infrastructure will continue to be poor. EMAP will overtake WE by 2017, becoming the second-largest region in terms of retail revenue after NA.
To find out more, Analysys Mason's Global Telecoms Forecasts is a comprehensive source of detailed fixed and mobile forecasts for eight geographical regions and at a global level. The forecasts cover a 5-year period from 2013 to 2017 and are backed by historical data and estimates for 2008 to 2012. Forecasts are updated twice a year in order to include the last quarterly data and all the changes in the macroeconomic, competitive and regulatory framework.
Figure 1: Telecoms retail revenue growth by region, 2012–2017 [Source: Analysys Mason, 2013]
Pablo Iacopino is an analyst with Analysys Mason. For more information visit www.analysysmason.com