London. June 2018. A view of the sign outside the PWC office by London Bridge in London.
According to the worldwide Telecom Outlook 2024-2028, notwithstanding slow growth and price issues, the worldwide telecom sector is expected to generate $1.3 trillion in total service revenue by 2028, with a compound annual growth rate (CAGR) of only 2.9%.
The sector’s long-term viability is in doubt because of this slow development, which trails the rate of global inflation.
This is hardly a victory because of the financial strain on telecom operators, even though there is an additional $200 billion in possible incremental income over the next five years.
Price increases are challenging due to the growing commoditization of the industry’s key services, mobile and fixed connections, while infrastructure investment remains essential.
According to the research, fixed and mobile subscriptions are predicted to increase by 4.3% to $1.14 trillion in 2023, while fixed broadband services are anticipated to grow at a CAGR of 3.8%. However, fixed voice subscription income is expected to drop by 1.8% a year.
Nonetheless, a slowdown in the industry’s sales growth rate is anticipated.
According to the paper, “through 2028, global industry revenues will increase at a compound annual growth rate (CAGR) of only 2.9%, below the projected rate of inflation, in which case total revenues will edge up to US$1.3 trillion.”
The paper claims that Nigeria’s telecom sector grew significantly in 2024, with $7.6 billion in total revenue from mobile services.
Between 2023 and 2028, the industry is anticipated to develop at a compound annual growth rate (CAGR) of 8%, positioning it as one of the fastest-growing telecom industries in the world.
According to the research, more mobile subscribers, not increased average revenue per user (ARPU), are the main drivers of Nigeria’s telecom expansion. Also emerging markets like Nigeria, India, Egypt, and Kenya are growing at faster rates than developed economies like Japan and Switzerland. This reveals stark contrasts at the national level.
Average revenue per user (ARPU) has a bleak future. It is predicted that mobile ARPU would decrease at a compound annual growth rate (CAGR) of -1.3% over the next five years, fixed broadband ARPU will stay relatively stable at -0.1%, and fixed voice ARPU will decrease by -4.7 percent.
According to the research, “fixed-line ARPU in Nigeria is expected to decline at a CAGR of –1.4%, while subscriber numbers rise at a CAGR of 9.8%.”
According to this pattern, subscriber growth—rather than increased revenue per customer—will provide the majority of the industry’s new value.
Since almost all income is used for debt payment, dividends, and capital expenditures, leaving little space for innovation, the industry’s financial difficulties are evident.
The growing commoditization of the industry’s basic goods and services is a major problem for the global telecoms sector, the paper claims. Despite continuing to make significant investments in infrastructure, this has made it challenging for telecom providers to hike pricing and hence the growth is hampered by pricing restrictions.
In addition to having trouble boosting pricing, the research noted that “its core products and services are becoming commodities, meaning it faces a continual need to invest in infrastructure.”
The industry still has room to develop in spite of these challenges. According to PwC, the global telecom industry would see an extra $200 billion in revenue growth by 2028.
“An extra $200 billion in incremental revenue growth is expected to be available for the sector by 2028.”
However, telecom businesses are under more pressure to develop new methods to add value from their current income sources as a result of this slow revenue expansion.
Despite the moderate gain in overall telecom income, PwC’s analysis identifies notable variations between geographies and services:
Between 2023 and 2028, fixed broadband and mobile subscriptions are predicted to rise steadily at CAGRs of 3.8% and 4.3%, respectively.
In contrast, fixed voice subscriptions are expected to decrease over the same time period at a CAGR of -1.8%.
While older markets stagnate or fall, emerging markets are predicted to drive telecom development.
The paper claims that although developed economies like Japan and Switzerland are seeing little to no growth, nations like Nigeria, Kenya, Egypt, and India are exhibiting above-average growth rates.
“The majority of nations, including the US and China, are clustered around the 0 to 6% CAGR band in fixed telecommunications. However, several outliers—most notably Kenya, Nigeria, Egypt, and India—show far faster development.
Mobile revenue growth varies greatly; older markets like Japan and Switzerland see drops, while Colombia leads with a 10.5% CAGR, followed by Argentina and India.
The Growth Strategies Using AI, 5G, and B2B Services, its operators are turning to new business sectors and emerging technologies for income prospects as traditional telecom services struggle with profitability.
In network administration, operational effectiveness, and customer service, artificial intelligence (AI) is quickly becoming a vital tool. For example, AT&T has decreased customer service agent contact times and software development time by 10–30% after implementing their generative AI platform, “Ask AT&T.”
In the meanwhile, 5G adoption is growing quickly. By 2028, there will be 7.51 billion 5G subscribers worldwide, up from 1.79 billion in 2023, and its percentage of all mobile subscriptions will rise from 18.8% to 64.1%. Monetization is still difficult, though.
Particularly in nations like the US, Saudi Arabia, South Africa, and China, fixed wireless access (FWA) broadband is showing promise as a means of bridging the digital divide between urban and rural areas.
Even though FWA subscribers are expected to increase at a compound annual growth rate of 18.3%, they will still only make up 6% of the whole broadband market by 2028.
As the cost of basic connection services continues to decline, telecom companies are also starting to prioritize the business-to-business (B2B) market. Businesses are customizing sector-specific solutions, including private 5G networks, cybersecurity, and Internet of Things (IoT) services.
For instance, Saudi Telecom Company (STC), which has secured significant contracts with companies like Aramco, is using its subsidiaries to diversify beyond connection into cloud computing, cybersecurity, and the Internet of Things.
Enterprise Innovation Is Driven by IoT and Private 5G Networks where the automobile sector is leading the way in the use of IoT services, which are expanding moderately. Automotive IoT revenue is predicted to rise at a 15.8% CAGR to $34.1 billion by 2028, driven by electric vehicles, which serve as mobile data centres.
Large-scale infrastructure sectors including mining, ports, and energy are also investing in private 5G networks for automation and remote monitoring.
Cellular IoT is also being used by manufacturers to create more adaptable factory layouts since wireless networks do not require frequent rewiring. Application enablement platforms, which are expected to rise at a 23.9% CAGR to $83.1 billion by 2028, will account for the largest increase in IoT revenue.
Keeping Profitability and Investment in Check, over the next five years, worldwide telecom revenues are expected to increase, but the sector is still limited by high costs and sluggish ARPU growth.
Finding a balance between infrastructure investment and profitability will be a challenge for telecom providers. Opportunities for income diversification are presented by new technologies like AI, 5G, and IoT, but businesses must figure out how to properly monetize these developments.
Whether telecom companies can go from basic connection providers to full-scale digital service providers and create new value in a world that is becoming more interconnected will be determined in the upcoming years.
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