Telecom services

With annual growth only just over 1% in 2017, global telecom markets are still feeling the squeeze. The slight uptick enjoyed by the global market as a whole is due largely to an improved situation in Europe where, after several years of recession, the regional market reported a mild and relative increase.

Even though one swallow does not make a summer… the revived growth in the European telecom services markets in 2017 is worth highlighting. It is highly unlikely that this foreshadows a sizeable surge, however: the growth rate in Europe is still below the global average, and the medium-term outlook is middling. So it will be some years before the 12% of revenue lost since the end of the 2000s is recovered. In addition, if the North American market has also been in decline for two years now, the sector there is still outperforming Europe’s by a sizeable margin: proportionate to the size of the two markets, revenue, traffic and investments in the US are still at least double what they are in Europe.

Slowing momentum in emerging markets

Growth in other parts of the world remains steadier, even if in emerging markets in particular the momentum is slowing automatically as the earlier impact of surging volume diminishes. In other words, the often low ARPU in these regions is not rising: weak purchasing power, competitive pressure and, in some cases, poor quality of service continue to constrict consumer spending. In Sub-Saharan Africa in particular, the double-digit growth of the 2000s that reflected the mobile market’s swift rise, dropped to 8% in the first half of the 2010s, and is not expected to exceed 5% in the second half of the decade. We are seeing a similar trend in Asia/Pacific, including the region’s two continent nations, with a sizeable decrease in China and a noticeable dip in India.

Data replacing voice

Looking at the individual segments, the inexorable decline of traditional landline calling continues apace: decreasing by an average 7% a year, with revenue that now accounts for less that 13% of the total telecom services market in 2017. Fixed data services, Internet access and corporate networks, on the other hand, continue to enjoy steady growth (+4.5% last year) and are now offsetting fixed calling ‘losses’ and helping drive positive growth for the fixed segment as a whole. Meanwhile mobile service revenue has been rising at a relatively steady (and relatively unchanged) pace: +1.7% in 2017 and regularly between +1% and +2% since 2014, which aligns with medium-term forecasts.

Growth still sluggish
North American operators more avant-garde than ever
* fiscal year ended March 31, 2017
Source: IDATE DigiWorld in "World telecom markets & players"