Telecom Revenue Growth Slows in Every Region

“Overall, growth in telecom revenue continues to slow in every geographic region,” according to  Stéphane Téral, Infonetics Research principal analyst.

Europe’s five largest service providers—Deutsche Telekom, Orange, Telecom Italia, Telefónica, and Vodafone—continue to experience declining revenue, though less pronounced than in the past three years, he noted.

Global mobile service revenue barely budged in the first half of 2014, up just 0.5 percent from the same period a year ago, Infonetics says.

But mobile data services (text messaging and mobile broadband) rose in every region in the first half, driven by the increasing usage of smartphones.

Mobile broadband services grew 26 percent year-over-year, enough to offset the decline of text message revenue declines, Infonetics reported. On the other hand, that sometimes was not enough to offset losses of voice revenue.

In Latin America, mobile data will not replace lost voice revenues. Orange voice revenue declined 3.3 percent in 2014. In Japan, DoCoMo says a change in voice tariffs might mean NTT does not make money on voice until 2017.

High speed access revenue still drives growth in mobile and fixed line segments, but revenue will “begin to stabilize” between 2015 and 2016, if  “our competitors behave, said Ramon Fernandez, Orange CFO.

Vodafone now is focusing on fixed network broadband for revenue growth, as its mobile business is declining.

On the video entertainment side of the business, there also are warning signs.

Only 40 percent of Millennials (people roughly 18 to 34) in the U.S. watch live TV each month, Forrester Research.

ComScore said in October 2014 that 24 percent of 18- to 24-year-olds do not have a traditional pay TV service.

Of those survey respondents, 13 percent previously had subscription TV service but have disconnected, while 11 percent have never subscribed to a linear subscription TV service at all.

Nielsen found in December 2014 that U.S. adults spent 60 percent more time in the third quarter of  2014 watching streaming video than they did the year before.

Traditional TV viewing, which had been falling among viewers ages 18 to 34 at around four percent a year since 2012, tumbled 10.6 percent between September 2014 and January 2015, according to Nielsen.

All of that illustrates fundamental revenue challenges in all the key products sold by communications service providers, fixed or mobile.

Acquisitions will help, as service providers buy growth in new product segments or geographies. Still, some big new revenue stream eventually will have to be found. That explains the interest in a variety of new businesses, largely centered around the Internet of Things.