Revenue Sluggishness Will Propel Consolidation Wave

Whether telecom revenue is growing, flat or shrinking has enormous consequences for any communications service provider, for obvious reasons. Public companies whose revenues do not grow, do not survive as independent entities.

Privately-owned firms might, or might not, survive if revenues are flat. Few can survive, long term, if revenues are dropping. And there are some signs of trouble, in that regard, though as with virutally anything related to the Internet ecosystem, “averages” can be misleading.

Researchers at Ovum think global telecom revenues will remain roughly flat over the next few years, with a decline in spending on voice services counterbalanced by growth in spending on mobile and fixed (broadband) data services.

Others believe growth will continue. Gartner researchers expect 4.3 percent revenue growth, globally, for 2013. IDC also forecasts low single digits revenue growth.

The total worldwide telecom market grew by 3.2 percent during 2012, and IDC is forecasting growth of 3.4 percent during the 2013 time frame, with the market settling into a steady growth rate of about 3.2 percent," according to Courtney Munroe, IDC VP. But those service provider revenues will be unevenly distributed, growing in most regions, but shrinking in Europe.

Telecom retail revenue in Latin America will grow at a compound annual growth rate (CAGR) of 3.3 percent between 2012 and 2017, according to Analysys Mason.

But the European telecom service market decreased for the third year in a row in 2011, by 1.5 percent, the European Telecommunications Network Operators Association reports.

In the third quarter of 2012, European carrier revenue contracted, though growing in other regions such as China, the United States, India and South America.

Even in the United Kingdom and Germany, the markets with the brightest future, STL Partners forecasts a respective 19 percent and 20 percent revenue decline in mobile core services (voice, messaging and data) revenues by 2020.

Revenue in the French market will decline 34 percent by 2020. In Italy, revenue will drop 47 percent and in Spain revenue will drop 61 percent by 2020.

Overall, STL Partners anticipates a reduction of 36 percent or €30 billion in core mobile service revenues by 2020, a loss of about €50 billion for Europe as a whole.

Flat or lowish growth rates are not an insoluble problem, in the near term, as some firms can grow by making acquisitions. And the growth problems generally are most acute for fixed network service provides, not mobile service providers, for the moment.

What is clear globally s rapid growth of mobile usage and revenues, notably with European weakness. 

In 2001, there were about one billion mobile phone subscribers in total, most of them in developed countries. By about 2012  there were six billion subscribers, and 73 percent of those (4.4 billion) were  in developing countries that account for just 20 percent of the world’s total gross domestic product.

In just 10 years, mobile phones have almost reached saturation point in countries where people earn just a few dollars per day. Smart phone adoption is following a similar sort of trajectory.

In 2009, the Asia-Pacific region had 86 million smart phone users. In 2013, 738.2 million smartphone users. By way of comparison, that means the Asia-Pacific region has more than four times as many smart phone users as the next largest region, , Western Europe, which will have 161.1 million by the end of the year, and North America, which will have 152.2 million.

Furthermore, nearly 2.5 billion of the world’s 4.3 billion mobile phone users in 2013 will be in the Asia-Pacific region, according to eMarketer.

Research firm eMarketer estimates that 2.43 billion people in Asia-Pacific will use a mobile phone at least monthly in 2013, representing 56.3 percent of the world’s mobile phone users.

More than one billion of these mobile users will be in China alone, and about half that number will reside in India. By 2017, eMarketer estimates, Asia-Pacific will have nearly three billion mobile phone users out of a total 5.10 billion across the globe.

So smart phones might be the fastest-adopted technology in human history.

Mobile phone usage is growing exponentially in the Middle East and Africa as well, with Africa expected to become the second-largest mobile phone region, after Asia.

In the Middle East and Africa, 525.8 million people use a mobile phone at least monthly. .
Smart phone use in the region will nearly double  to 112.2 million, up from 67 million in 2012, while penetration of smart phones among the population as a whole in will increase from 5.1 percent to 8.3 percent.

In 2001, there were about one billion mobile phone subscribers in total, most of them in developed countries. By about 2012  there were six billion subscribers, and 73 percent of those (4.4 billion) were  in developing countries that account for just 20 percent of the world’s total gross domestic product.

In just 10 years, mobile phones have almost reached saturation point in countries where people earn just a few dollars per day. Smart phone adoption is following a similar sort of trajectory.

In 2009, the Asia-Pacific region had 86 million smart phone users. In 2013, 738.2 million smartphone users. By way of comparison, that means the Asia-Pacific region has more than four times as many smart phone users as the next largest region, , Western Europe, which will have 161.1 million by the end of the year, and North America, which will have 152.2 million.

Furthermore, nearly 2.5 billion of the world’s 4.3 billion mobile phone users in 2013 will be in the Asia-Pacific region, according to eMarketer.

Research firm eMarketer estimates that 2.43 billion people in Asia-Pacific will use a mobile phone at least monthly in 2013, representing 56.3 percent of the world’s mobile phone users.

More than one billion of these mobile users will be in China alone, and about half that number will reside in India. By 2017, eMarketer estimates, Asia-Pacific will have nearly three billion mobile phone users out of a total 5.10 billion across the globe.

So smart phones might be the fastest-adopted technology in human history.

Mobile phone usage is growing exponentially in the Middle East and Africa as well, with Africa expected to become the second-largest mobile phone region, after Asia.

In the Middle East and Africa, 525.8 million people use a mobile phone at least monthly. .
Smart phone use in the region will nearly double  to 112.2 million, up from 67 million in 2012, while penetration of smart phones among the population as a whole in will increase from 5.1 percent to 8.3 percent.

Virtually no observers seem to think global telecom revenue will shrink in the near term, despite regional weakness in Europe. The only real questions seem to revolve around the rate of growth, especially for mobile services, which are the growth driver in most markets.







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