Wednesday, December 5, 2018

Correlation Between GDP and Telecom Revenue Growth is Problematic

Since telecom industry revenue is fairly directly linked to gross domestic product, over the long term, telecom service provider connectivity revenues will be closely linked to growth of GDP, all other things being equal.

Of course, all other things are not equal. There is more growth lying ahead in Africa and Asia than in North America and Europe, for example. Eventually, as markets saturate, the correlation with GDP becomes more pronounced.

Were the industry stable, single-digit revenue growth might not be such an issue. In an environment where product substitution is high and likely growing, and where end users increasingly are finding ways to remove demand from the public network services market, single-digit growth is a big challenge. 

It does not take much shift in demand to tip connectivity revenue to a negative growth profile.  In fact, flat revenue growth seems to be the global trend. 



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