The future of telco

The global telecommunications industry is experiencing a declining and sluggish growth.

- MARY ANN LL. REYES

A study by PwC Global revealed that between 2023 and 2028, revenues from fixed broadband, mobile, and fixed voice subscriptions will grow at a projected compounded annual growth rate (CAGR) of 3.8 percent, 4.3 percent and decrease by 1.8 percent, respectively.

Telecoms service average revenue per user (ARPU) is expected to continue to decline over the next five years, with mobile ARPU falling at a CAGR of -1.3 percent, fixed broadband ARPU relatively flat at a CAGR of -0.1 percent, and that of fixed voice ARPU seeing a stronger decline at a CAGR of -4.7 percent.

It noted that the industry is currently in a situation where almost all the cash it generates is absorbed by capital expenditures, dividends, and servicing debt, thus, leaving very little for investment in innovation of enhanced customer experience.

The report pointed out that the telecoms industry continues to face a fundamental challenge - that its core products and services are becoming commodities, meaning it has difficulty raising prices while it faces a continual need to invest in infrastructure.

But it emphasized that even in industries with relatively slow growth, there are always niches of expansion and opportunities for companies to improve their bottom lines. It said that by 2028, there will be an additional $200 billion in incremental revenue growth up for grabs across the sector, but this picture puts even more pressure on players in the telecommunications system to find new ways of creating value from existing revenue flows.

One opportunity for value creation, it said, lies in the business-to-consumer services segment. Telecoms, it noted, have a powerful new tool in artificial intelligence, especially GenAI, which can be deployed to help take cost and friction out of the B2C business, protect margins, and improve customer experience through AI-enabled personalization at scale.