KPN says it will prioritize network investment to support “traditional” connectivity revenues earned from the mass market (consumers and small business).
Some might argue that is a mistake; that perhaps KPN should be looking to new lines of business with that capital, given the attrition of all legacy connectivity products and the degree of competition in the Netherlands market. KPN should, in other words, look to diversify its revenue streams.
Whether that is edge computing, internet of things, apps or platforms of some sort, moving “up the stack” or “elsewhere in the ecosystem” would seem to be essential--where possible--as all legacy revenue streams erode and profits evaporate forcing a search for replacement revenue sources .
As often happens, good advice for some companies is arguably bad advice for all. Big companies have opportunities that small companies do not. Big companies in big markets have options that small companies do not.
“Small” in this case is annual revenues in the $6.5 billion range. Even that amount of revenue likely puts KPN in the broad ranks of many telecom firms with revenues in mid-single digit billions.
Many firms--perhaps most--have annual revenues in single digit billions.
KPN in the Netherlands is not among the largest 100 telcos globally. There might be something on the order of 810 telcos globally that operate at least nationally in at least one country.
Where there now are 810 telecom service providers, there will be but 105 by 2025, says Bell Labs. That consolidation of about 87 percent in seven or eight years would be beyond comprehension, for most of us, and would be an apocalypse for most in the industry.
Capgemini calls an era of massive consolidation on a “spectacular” level. The need for scale is among the reasons.
Overall, KPN is said to have revenue share of no more than 34 percent. KPN has about 42 percent of the mobile market and perhaps 30 percent share of broadband connections. Cable TV operators, as you might guess, lead the video subscription business in the Netherlands.
The point is that small service providers might not have the choice to add new roles elsewhere in the ecosystem. In the near term, the only practical choice might be doubling down on the existing business, as tough as that might be. Longer term, being acquired is the likely exit.
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