The telecommunications industry has a growth problem. Its characteristics are well known. Telco industry growth is hamstrung by the inescapable fact that core products and services are becoming commodities, making it more difficult to raise prices, even as inflation continues to run high. All the while, telcos need to invest in expensive infrastructure; 5G today, 6G tomorrow. It’s a vicious cycle that’s hard to break.
Telecommunications industry growth – the outlook
As PwC found in its recent report The Global Telecom Outlook 2024-2028, growth is happening, but at too slow a rate. PwC found that the sector’s total service revenue rose 4.3% in 2023 to US$1.14 trillion. According to its forecast, global industry revenues will rise at a compound annual growth rate (CAGR) of just 2.9% to 2028. That’s below the projected rate of inflation.
Other telco industry analysis put the growth figure even lower. Analysis Mason, for instance, predicts that telco service revenue worldwide will grow at a CAGR of just 1% between 2024 and 2029.
However, the true state of telco industry growth is more complex than it at first seems. As PwC acknowledges, slow global growth overall masks wide variations between different services as well as at the national and regional levels. What’s more, one can never ignore the ability of telcos to drive growth through innovative new services and customer propositions.
Telecom industry growth today – three trends to watch
One of the major factors influencing telco industry growth today is location, with emerging markets outperforming the rest. PwC’s figures suggest that a number of African countries including Nigeria, Egypt, Kenya as well as Latin American countries including Colombia and Argentina are experiencing significant growth in both mobile and fixed telecom revenue.
Location aside, the telecom industry growth rate is also decided by emerging solutions that are targeted at enterprise customers. These are taking a variety of forms, but some of the most promising include:
- Leveraging the AI opportunity
Like companies in most sectors, telcos are experimenting with AI to drive efficiencies in their business operations. For instance, T-Mobile has deployed a predictive AI-powered platform that uses AI-enabled data and business process innovation to improve customer satisfaction. As a result, it has been able to reduce inbound customer contact by 75%.
The real growth area to watch, however, is where telcos look to deploy monetised AI services to third parties. For example, Taiwan Mobile offers B2B customers an AI agent that was initially developed for the operator’s own customer service centre.
Beyond this, telecommunications companies have a significant opportunity to position themselves as the foundation of AI infrastructure to meet national and regional demand. Indeed, global tech intelligence firm ABI Research projects that the telco sector will generate more than $21 billion in GPU-as-a-Service (GPUaaS) revenue by 2030.
- Managing growth constraints with investment sharing
As already mentioned, one of the major drags on growth is the need for telcos to continually invest in new infrastructure, a requirement that’s not shared by the over-the-top network service providers against which they increasingly compete.
Telecom industry growth can be given a significant boost through investment sharing. According to McKinsey, telcos can adopt collaborative models to ease the pressure that network and infrastructure investments place on return on invested capital. One strategy is network sharing, which has gained significant traction in recent years. The benefits are substantial. McKinsey believes that depending on the type of sharing arrangement (passive, active, etc.), operators can achieve savings of 10–25% in operating expenses and 15–40% in capital expenditures.
- Getting in on digital marketing
As in the case of AI, telcos are looking at other vertical sector plays where they can offer enterprise services to businesses. Digital marketing offers a particularly promising sector. The $650 global digital advertising sector is ready for new technology propositions that can help brands engage better with their audiences through personalised, privacy-first solutions.
Telcos can expand into identity verification services by partnering with adtech firms to offer two key types of IDs. The first verifies users on the open web without tracking, matching publisher or brand IDs with network data to create consistent, cross-site user profiles. The second generates a real-time, single-use dynamic ID for ad targeting. Verified with telcos’ consented first-party data, it enables secure audience activation without sharing user data.
As well as offering a lucrative new revenue stream, telco-verification services can also help boost telco industry growth by improving their own marketing campaigns. Leading telcos are already doing just that. In the Middle East, for example, e& UAE saw a 68% cost reduction for targeted campaigns while boosting user engagement 12% by leveraging telco-verified IDs.
Firing up telecom industry growth worldwide
While overall telco industry growth has been slower than the industry needs, there are clear pockets of momentum driven by innovation, strategic partnerships, and new service models. These success stories offer valuable lessons. Telcos aiming to unlock sustainable growth should look closely at what’s working, adapt those approaches to their own markets, and move with urgency to capture new opportunities.
