ICC News According to the IDC Worldwide Semiannual Telecom Service Tracker Report, in 2022, global spending on telecom services and pay TV services will increase by 2.2% year-on-year to $1.478 trillion. IDC predicts that in 2023, worldwide spending on telecom and pay TV services will grow by 2.0% to $1.541 trillion. IDC raised its growth rate for 2023 by 0.3 percentage points compared to the forecast released in November 2022, reflecting inflation-driven increases in telecom service charges.
This is the second time in the past six months that IDC has raised its forecast for the telecom services market, with positive adjustments for all regions worldwide. This confirms the thesis that inflation occurs equally worldwide and that operators behave similarly when inflationary pressures threaten their profitability. In addition, IDC said the impact now observed is the result of preliminary tariff adjustments that will generally occur in mid-2022. According to the latest forecast of the International Monetary Fund (IMF), inflation will continue for at least three years, which means that operators will continue to raise tariffs, customers will pay more for telecom services, and the total nominal value of the market will increase at a faster rate. Speed growth. That’s why IDC raised its forecast not just for 2023 but for the entire first half of the forecast period.
IDC raised its forecast for Asia Pacific by 0.7 percentage points, the Americas by 0.3 percentage points, and Europe, the Middle East, and Africa (EMEA) by 0.1 percentage points. At first glance, the magnitude of change in EMEA, which has above-average inflation while struggling to find cheap Russian energy alternatives, may seem relatively low. This can be explained by: 1) the war in Ukraine and related economic sanctions imposed on Russia, the largest market in the CEE sub-region, and 2) a sharp slowdown in major European economies driven by a sharp rise in ECB interest rates. Also, the fact that IDC had the highest upward revisions for the EMEA region during the last update should be considered. Nonetheless, the fastest growing region this year and throughout the forecast period is expected to be Asia Pacific due to relatively low market saturation in less developed countries.
High inflation is bad news for any market because the positive boost it brings is only nominal. A closer look at the projected growth rates reveals that they are well below the annual inflation rates published by monetary statisticians, implying that the real value of the market is falling. As a result, telecom operators continue to invest heavily in advanced telecom technologies. They hope migrating to all-IP, and Next Generation Access (NGA) broadband will help offset the decline in fixed and mobile voice. They also believe 5G will unlock new opportunities by allowing massive machine-type communications and ultra-reliable low-latency communications.
Telecom operators have also accelerated the digitization and software nation of business processes, created new go-to-market strategies based on data and intelligence, and deployed innovative business models based on telecom as a platform and co-creation within the ecosystem. They are also looking for additional revenue streams in non-telecom areas such as IoT, Data Centers, Cloud, AR/VR, IT Services, Video on Demand (VoD), Enterprise Vertical Solutions, Financial Solutions, Cyber Security, Digital Media, and Electronics business, etc.
Kresimir Alic, Research Director, Global Telecom Services, said: “Telecom operators are undergoing a complete transformation from traditional commodity service providers to modern full-service full-stack technology providers. In this way, they are becoming leaders in the digital transformation revolution and rightfully hope to occupy one of the central positions in the new digital world.”