According to the International Data Corporation (IDC) Worldwide Semiannual Telecom Services Tracker, global spending on telecommunications and pay-TV services will reach US$1.55 trillion in 2023, a 3% rise over 2022.
According to the report, this is mainly a consequence of hyperinflation happening in countries such as Turkey, Uganda, Egypt, and Argentina, where it has become normal to see quarterly ARPUs (average revenue per user) growing by more than 50% on a yearly basis.
On the other hand, expectations for the telecom services market in Western Europe have been lowered slightly primarily due to a worsened economic environment in a few key countries, including Germany.
IDC believes this is the first sign of the emergence of a new market force that will put the current growth rates under pressure and slowly bring them down toward the end of the forecast period.
Inflation is a global phenomenon, but the trends it shapes in different local markets vary significantly. In many countries, telecom operators were allowed by regulators to increase their tariffs (often applying a Consumer Price Index model), resulting in healthy service revenue growth on an annual basis.
In other countries, however, this move drove the accelerated migration of customers to cheaper tariff packages and cheaper operators, so the value growth rates were much lower than the nominal tariff increases.
The report reveals that mobile is and will remain the largest segment driven by the growth in mobile data usage and machine-to-machine (M2M) applications, which are offsetting declines in spending on mobile voice and messaging services.
The fixed data services segment will also grow, driven by the need for higher bandwidth services, and will fall over the forecast period as rapidly declining TDM voice revenues are not being off services—spending on fixed voice set by the increase in IP voice.
Furthermore, the traditional Pay TV market will decline slightly over the forecast period due to the growing popularity of video-on-demand (VoD) and over-the-top (OTT) services. Still, these services will remain an essential part of the multi-play offerings of telecom providers across the world.
“Operators need to carefully evaluate every single market for tolerance to price increases,” said Kresimir Alic, research director of Worldwide Telecom Services at IDC.
“They should continuously assess and compare the product mixes, quality of services, pricing, and customer support capabilities of all supply-side participants. That information should help them find a magic percentage that will not scare the customers away, positively impact revenues, and help them maintain healthy margins in these turbulent times.”