There is modestly good news for global connectivity service providers on the revenue front, through 2022: revenue growth rates are going to tick up modestly. The bad news is that free cash flow is going to dip about two percent on higher capex and opex.
And while mobile internet access can be counted on to boost revenue in developing markets, developed markets will have to rely on revenues from new 5G use cases. So there is more risk in the latter; less risk in the former.
According to a forecast by Arthur D. Little consultants, the North American, Latin American and Middle East and Africa regions will experience service provider revenue growth above global averages.
Global service provider revenue growth will average three percent per year from 2017 to 2022, a slight uptick from growth rates between 2014 and 2016.
“In North America, we expect total revenue CAGR of 4.6 percent from 2017 to 2022,” A.D. Little says. Latin America will see 5.2 percent CAGR, while MEA will a 4.9 percent CAGR.
The revenue growth can be attributed primarily to increased high-speed wireless data coverage in emerging markets, higher revenue from fixed infrastructure required to support aggressive increases in data consumption and new use cases enabled by 5G deployments in more mature markets.
“New revenues from 5G are expected to arise from new B2B and B2B2X use cases, as significant incremental revenues are not immediately expected from consumer 5G services,” the consultants say.
The baseline forecast predicts global telecoms capex growing at a CAGR of seven percent from 2017 to 2022, a rate that is more than double the historical CAGR and also outpaces the forecast growth in global telecoms revenue for the same period.
As a result, free cash flow will dip about 1.7 percent
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