Telcos Need to Place Big Bets

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Telcos Need to Place Big Bets

source: Infonetics
It is not yet clear how well some tier-one service providers will fare, as providers of enabling services
for business partners. It is clear that many observers believe future revenue sources will depend more on partner relationships and services than telco-created apps and services.


Some might argue that voice, Internet access, messaging, wholesale and enterprise services are the “core,” while virtually everything else must be developed.

Those pressures arguably are most intense in the European markets, where virtually every legacy service has declining revenues.

source: Ali Saghaeian

If global telecom revenues were about $2.2 trillion in 2015, and one assumes that half of that revenue from legacy sources will be lost over 10 years, then new services will have to grow by $1.1 trillion over that same decade simply to replace lost current revenues.

source: Telco 2.0
For the largest global service providers, that implies discovery and creation of huge new markets. For NTT, some $70 billion in annual revenue has to be found. AT&T would  need to discover $65 billion, Verizon perhaps $59 billion, Telefonica $40 billion, Deutsche Telekom $38 billion.

In some cases, a significant portion of the gain could come from acquired firms in new geographies. Still, with all legacy services in decline, or destined to decline, that strategy is a short term solution only.

One might be skeptical about Verizon’s prospects in mobile advertising, for example, or AT&T’s move into entertainment video. Whether IoT winds up being as big a revenue driver for mobile companies as some anticipate also is open to question.

What is not open to question is that mobile firms need to make big bets on replacement revenue sources, as difficult as it might be. The largest mobile firms will need to create new businesses and revenue streams worth scores of billions.


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