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Mobile operators' revenue to plunge by 2018

Dubai, October 10, 2013

The telecom operators across the globe will face revenue decline by 2018 for the first time in mobile industry's history with Middle East registering the biggest fall in average revenue per unit globally, said a report.
 
The mobile operators will face global revenue decline by 2018 for the first time in mobile industry history, said a new research, indicating that the golden age of telecoms growth and prosperity was waning.
 
The global mobile connections will grow from 6.5 billion in 2012 to reach 8.1 billion by 2018, while annual mobile service revenues will rise from $968 million to $1.1 trillion. However, global service revenues will contract in 2018 for the first time in the history of the mobile industry, declining from 2017 levels by one per cent or $7.8 billion, said global analyst firm Ovum in its report.
 
As such, over the next five years, innovation in services, tariffs, business models, network operations, and partnerships will be key revenue-generating strategies, it stated.
 
Ovum pointed out that as growth slows and ARPU continues to decline, operators will need to find new ways to serve customers more profitably, not just focus on increasing subscriber numbers, 
 
The new research also predicts that global connections will grow by a CAGR of less than 4 per cent between 2012 and 2018, while global revenues will grow at less than half that rate. 
 
Sara Kaufman, analyst for Industry, Communications and Broadband at Ovum and author of the report, said, "Growth will continue to slow in most markets around the world. When you compare connection and revenue CAGRs, it is clear that mobile operators are facing a new reality: they must do much more with much less."
 
"Consolidation will help to alleviate some market pressures and is inevitable in many markets. But the need for revenue stabilization is becoming paramount for a sustainable future," she noted.
 
According to Kaufman, the operators in developed markets face particularly challenging times. Connections in Western Europe will grow by a CAGR of less than one per cent, while revenues will decline at a CAGR of 1.48 per cent. 
 
Several other developed markets will see year-on-year revenue declines in 2018, including the US, which will begin to show signs of its maturity, she stated in the report.
 
Much of the revenue decline will be driven by falling ARPU, which will continue to decline across all markets by a 2.7 per cent global CAGR between 2012 and 2018. The greatest decline will be in the Middle East, where ARPU will fall by a 2.5 per cent CAGR, she added.
 
However, Kaufman noted, “ARPU cannot fall indefinitely. In markets with very low ARPU, it will reach a floor and then stabilize.”
 
Despite the global trend, some growth opportunities will still exist, particularly in Africa, where revenues are expected to grow at a CAGR of 4.2 per cent throughout the forecast. 
 
No other region in the world will see revenue growth at a CAGR above three per cent during the forecast period. Select markets in Asia-Pacific and South & Central America will also drive growth over the next five years.
 
Africa will also have the fastest-growing connections, increasing at a CAGR of 5.6 per cent between 2012 and 2018, and ending the period with just over 1 billion connections. 
 
Growth in Asia-Pacific will slow, but this region will remain the biggest contributor of new connections, driven largely by China, India and Indonesia. Connections in this region will total 4.2 billion in 2018 and will account for 57 per cent of net additions globally through the forecast period.-TradeArabia News Service



Tags: Middle East | Telecom | Ovum | Revenue |

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