alling revenues from data roaming, voice and pre-paid services have made 2020 a challenging year for the global telecom industry. A new Analysys Mason study predicts the way forward.
Despite the transition to online life and business – and the resultant increase of network usage – telecom revenues fell by nearly 3% over the course of 2020, amounting to a $43 billion hit when compared to 2019. According to Analysys Mason researchers, the industry will likely take a few years to recover.
Stephen Sale, a research director at the firm, pointed out that some signs of growth will emerge as early as next year, putting the sector back on an upward trajectory. “Fixed broadband has helped to offset declines in mobile revenue for many operators and will support growth in 2021,“ Sale said.
There is some cause for promise among struggling segments as well. “While revenue from roaming has been badly hit, operators will begin to report growth again from the second quarter of 2021,” he noted. At the same time, Sale doesn’t expect revenues to reach pre-pandemic levels any time before 2023.
Challenges in the telecom industry still outweigh the advantages. For one, many businesses remain on government support, which is due to be withdrawn gradually over the course of next year – particularly as the vaccine rolls out. According to the researchers at Analysys Mason, this will likely put several operators out of business, denting overall industry revenues.
Then there is the 5G disappointment. With many operators planning to start their 5G launch in 2020, many anticipated a sizeable telecom revenue boost that never materialized. Consumers already affected by job and income losses amid a flailing economy were reluctant to invest in a contract upgrade. And so far there is little incentive to do so.
As pointed out by Analysys Mason head of networks and software research Larry Goldman, “the future of 5G will be that it can do something different.” As of now, the technology is lacking the proven use cases to deliver the revolutionary changes the industry is heralding. For the next year at least, 5G is not expected to drive any revenue boosts.
Trends & opportunities
That being said, operators are expected to use 2021 to develop more innovative 5G applications. Sale highlighted that 5G’s biggest opportunity lies in the B2B market, and 2021 will see the rollout of several enterprise-focused 5G solutions. The upshot is that 2021 might well be the launchpad for a future 5G boom.
Other Industry 4.0 technologies are also expected to deliver value in telecom. The researchers note the rise of mobile virtual network operators (MVNOs) – 1NCE, EMnify and Twilio for instance – grounded in the rapidly expanding internet of things (IoT) market, which have tremendous disruptive potential for telecom. Operators will likely respond with action. Analysys Mason expects at least one acquisition of an IoT MVNO in 2021.
On the back end, automation is delivering much needed cost savings for telecom businesses, reducing pressure on the payroll from routine work. “We expect operators to increase their spending on fully automated orchestration from $4 billion in 2020 to $20 billion in 2025,” noted Sale.
Lastly, there is the cloud opportunity. “Trends accelerated or disrupted bz the pandemic will provide new opportunities for operators at the intersection of cloud and connectivity, for example in cloud, gaming, healthcare, education and business cloud services,” concluded Sale. To sum up, while 2020 has been a devastating year, and recovery will take time, the global telecoms sector is in for an interesting and potentially transformational ride over the next few years.