Global telco revenues to stay flat

smartphones-genericWorldwide revenues for the telecoms industry are expected to stay mostly flat over the coming years, according to a report.

A deep decline in spending on voice services will be offset by growth in mobile and fixed broadband data services, according to analyst house Ovum. Total telco IT spending is expected to reach US$60 billion in 2017, at a compound annual growth rate (CAGR) of 0.6 percent between now and then. It will be emerging markets such as APAC, Middle East and Africa, and South and Central America that will drive top spending.

For North America, it’s predicted spending will run a CAGR of 0.8 percent to hit $17.5 billion by 2017.

Telcos will have to get their thinking caps on about tariffs and services to build revenues over the next five years. LTE, network optimisation and “creative” approaches to partnerships will become ways for businesses to save cash, according to report author Shagun Bali.

“Telcos need to monetise new business models, leverage customer data by investing in analytics, and define their response to over-the-top players,” Bali said.

Ovum has mapped the overall trend as reducing internal IT spending while increasing spending on external IT projects. Telcos will have to outsource maintenance of legacy systems, and make use of trusted partners that can provide expertise in segments such as big data analytics.

“The combination of middling profits, high capital requirements, high risk, and uncertain economic growth requires telcos to place their bets carefully, including investing in growing revenue streams and managing customer experience more than ever before,” Bali said. “The result is increased opportunities for the IT industry. In the long term, telcos will place more focus than they have before on software to drive innovation”.