Telecom never has been classified as a “growth” industry, as equity analysts use the term. In fact, for most of its history, telecom was a “public utility,” viewed much as are electrical and water enterprises are seen.
That is to say, connectivity providers have often been government owned, highly regulated enterprises not expected to grow revenues more than the rate of inflation.
The era of mobile communications has shaped our perceptions in new ways, compounded by the privatization and deregulation waves that began in the 1980s.
As mobility has become the way we supply communications services in those parts of the world that never had robust communications in the past, it has seemed that telcos could become “growth” engines.
Once we reach saturation of facilities and services, the older framework is likely to reassert itself. The most-recent revenue forecast by STL Partners suggests revenue globally will grow less than the rate of inflation through 2022. That might, in fact, be the future and fundamental reality. Essentially, the global telecom business will begin to contract, in real terms, even as nominal revenue grows, albeit less than does inflation.
And even that outcome also hinges on service providers being able to discover and create enough new revenue sources to replace about half their current revenue every decade. Barring such success, revenue will contract faster.
That will be unsettling. A reasonable observer would safely make a few predictions. No industry that is contracting can avoid major waves of consolidation; some bankruptcies and business model changes for the survivors.
It will not be fun, for most.
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