Analysys Mason, a research and consulting firm in the technology, media, and telecommunications (TMT) sector, has unveiled its highly-anticipated forecasts for the TMT industry in the year 2024. These predictions shed light on significant trends and transformative changes expected to shape the industry’s landscape in the coming year.
#1 Investor Focus on AI Impact in Mergers and Acquisitions
Analysys Mason CEO Bram Moerman highlighted the pivotal role of artificial intelligence (AI) in shaping the telecoms industry’s progress. In 2024, investors are poised to closely evaluate the impact of AI on potential mergers and acquisitions (M&A) targets. The assessment aims to comprehend growth drivers and anticipate efficiency opportunities and associated risks, according to Charles Murray, Expert in telecoms transactions.
#2 Surge in Telecom Operators’ IT Services Investments
Telecom operators’ strategic investments in Information Technology (IT) services are anticipated to result in sustained Business-to-Business (B2B) revenue growth. These IT services, which have steadily risen from constituting 20 percent of B2B revenue for an average operator in 2017 to over 30 percent in 2022/23, are projected to continue ascending in 2024. This expansion is poised to propel overall B2B revenue growth rates beyond those achieved in consumer revenue, primarily driven by voice, connectivity, and TV services, according to Catherine Hammond, Expert in enterprise services.
#3 Regulatory Focus on Scope 3 Emissions
A growing regulatory emphasis on Scope 3 emissions will necessitate telecom players to closely monitor and report emissions across their supply chains. With mounting pressure from regulations and consumers alike, operators are urged to take responsibility for both direct and increasingly challenging-to-track indirect emissions, according to Anurag Dey, Expert in sustainability in TMT.
#4 Crucial Role of Operators in Addressing the Digital Divide
In a bid to prevent an exacerbated digital divide and for their commercial interests, telecom operators are urged to actively articulate the benefits of emerging technologies and engage with regulatory bodies. The year 2024 is anticipated to mark a significant transition for operators in developed markets towards 5G-standalone architectures, whereas some regions still grapple with barriers hindering 5G deployment, risking lagging behind leading markets, according to Janette Stewart, Expert in TMT regulation and spectrum and Caroline Gabriel, Expert in TMT regulation and spectrum .
#5 Favorable Conditions and Growth for Data-Centre Operators
Data-centre operators are expected to experience more favorable conditions and a much-needed boost due to emerging technologies, creating opportunities for both these operators and the wider ecosystem. Factors such as softened inflationary pressures and increased demand, coupled with enterprise cloud migration supplemented by AI usage, are set to drive growth in this sector, according to Jay Lee, Expert in TMT strategy and planning.
#6 Leveraging AI for Telecoms Operators’ Profitability
After a period of lean profitability, telecoms operators are eyeing AI to reverse their fortunes by initially reducing staff costs in areas like customer services, HR, and sales. This reduction in headcount requirements is expected to commence in sales teams, gradually extending to software development and network operation functions, ultimately bolstering operators’ profits and enhancing customer service experiences, according to Jose Nazario, Expert in TMT strategy and transformation.
#7 Growing Importance of Cybersecurity
As market pressures drive business transformations, cybersecurity considerations are slated to become increasingly vital. Companies undertaking digital transformations will need to urgently address data quality, business process efficacy, and the associated cybersecurity risks amidst a landscape of escalating threats and stricter regulatory compliance, according to Paul Jevons, Expert in transformation in TMT.
#8 Satellite Integration Driving Telecoms Operators’ Growth
Telecoms operators’ integration of satellite capabilities into their networks is anticipated to yield substantial benefits. The surge in satellite capacity is fostering numerous telecom partnerships, contributing significantly to growth opportunities in an otherwise declining terrestrial business, according to Christopher Baugh, Expert in satellite communications systems and markets.
Satellite connectivity is set to grow by USD5 billion between 2022 and 2027. Early movement is apparent in partnerships such as Deutsche Telekom/ViaSat for aeronautical connectivity, Orange using satellite to transform its rural coverage, and Amazon Kuiper partnering with NTT/SkyPERFECT JSAT for remote and back-up connectivity.
#9 Middle Eastern Telecoms Operators’ International Expansion
Fueled by robust balance sheets, Middle Eastern telecoms operators are likely to continue their international expansion in 2024. Recent investments in global telecom operators signify the first wave of investments, driven by both short-term valuations and longer-term operational synergies and M&A considerations, according to Rohan Dhamija, Expert in TMT transactions and strategy.
Recent investments by e& in Vodafone Group and Yettel/PPF, and STC in Telefonica will be seen as the first wave of investments in international telecoms operators.
#10 Dynamic Changes in EU’s Telecom Landscape
The European Union’s telecom sector anticipates recalibration in response to substantial structural changes in major markets. Developments in Spain, Italy, and France highlight impending realignments, acquisitions, alliances, and significant transformations shaping the EU’s telecom landscape in 2024, according to Joan Obradors, Expert in telecoms strategy, regulation and business planning, and Giovanni Parenti, Expert in telecoms transaction and strategy.
#11 The strategy of ‘more for more’
The strategy of ‘more for more’ will run out of road in 2024. Operators in high-income countries have offered existing users progressively higher mobile data allowances or fixed-line speeds to increase (or at least defend) revenue. A new approach is now needed, according to Tom Rebbeck, Expert in telecoms services and IoT.
Over 50 percent of contract customers in the USA already have unlimited mobile data (Verizon reports that over 80 percent of contract customers are on unlimited plans). The share of customers on unlimited deals is rapidly growing in other countries.
In fixed markets, with customers increasingly on high-speed fibre plans, an equivalent problem exists: operators are running out of ‘more’. UK operators are trying ‘more for the same’ – mid-contract price rises are helping raise mobile (if not fixed) ARPUs – but this only works when there are no disruptive players.
In the USA, operators are experimenting with premium unlimited plans, essentially offering new types of ‘more’ (higher speeds, content). 2024 will see much more trial (and a fair bit of error) as more operators experiment with different options to replace ‘more for more’.
#12 Initiatives to cut costs and seek new revenue
Operators across the Asia–Pacific region will respond to stagnation in the telecoms markets with new initiatives to cut costs and seek new revenue, according to Dion Teo
Expert in telecoms strategy and policy.
The drive for cost efficiency in a stagnant mobile market is acute across Asia. As the importance of differentiated coverage diminishes, the option to share active network infrastructure and thereby reduce costs becomes increasingly valuable. This transformation has already played out across Europe with significant commercial benefit for operators.
Several mobile operators will become more active in the fixed broadband market in developing Asia–Pacific, boosted by the benefits of fixed-mobile convergence. This transition will create a wave of investments in fibre infrastructure. There will be a strong imperative for infrastructure sharing in the form of commercial fibrecos.
Pursuing a commercially-driven model of shared infrastructure – active RAN sharing through new mobile netco vehicles, and fibre sharing through fibrecos – is a complex but lucrative process that should be a major priority for operators across Asia.
