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Telcos to expect slow growth in the next five years: Ovum

Nurdianah Md Nur | Oct. 16, 2013
Telcos have to find new ways to serve customers more profitably instead of simply focusing on increasing subscriber numbers.

Telcos should embrace themselves for challenging times ahead, according to the latest report from global analyst firm Ovum.

The report projected that operators in Asia Pacific will experience slow growth over the next five years. However, the region will remain the biggest contributor to the global telco revenues, driven largely by China, India and Indonesia. Connections in this region will total 4.2 billion in 2018, which accounts for 57 percent of net additions globally between 2012 and 2018.

The report also revealed that operators in other parts of the world will see declining revenues due to falling ARPU (average revenue per user) from now till 2018. This will result a slow global growth. Ovum forecasts global mobile connections to increase from 6.5 billion in 2012 to reach 8.1 billion by 2018, which accounts for a CAGR (compound annual growth rate) of less than 4 percent. Global service revenue is also expected to contract in 2018 - the first time in the history of the mobile industry - declining from 2017 levels by 1 percent or US$7.8 billion.

As growth slows and ARPU continues to decline, Ovum said that innovation in services, tariffs, business models, network operations, and partnerships will be key revenue-generating strategies.

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."



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