The Global Telecom Market - What the next 5 years have in store
Isabelle Paradis
October 2007
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According to the information released by HOT TELECOM in its latest report " Global Telecom Market Status and Forecast " report, the global telecom services revenue reached US$1.5 trillion in 2006, representing a 7.4% increase on 2005, and a slight slowing of growth (which was 8.8% between 2004 and 2005). Over the forecasted period to the end of 2011, growth is projected to slow to a five-year compound annual growth rate (CAGR) of 4.2% and revenue is expected to increase by US$347 billion to reach almost US$1.9 trillion.

The slowing of the revenue growth will be caused by the declining value of the fixed services market in a number of countries, increasing saturation in some mobile and Internet markets, and pressure on prices across all sectors. An increasing percentage of the world's telecom revenue will be generated by mobile and Internet services and it is forecasted that mobile will surpass the fixed market, in terms of revenue, as early as the end of 2007.

By year-end 2006, the global aggregate number of fixed, mobile and Internet subscribers grew by 15.1% to over 4.4 billion and this number should grow by a further 12.3% to 5.0 billion by the end of 2007. Although fixed subscriber growth is slowing, the total number of fixed, mobile and Internet subscribers should grow by a CAGR of 8.6% over the next 5 years to reach 6.7 billion. The growth in number of subscribers will mainly be driven by new broadband and mobile connections.

Mobile should remain one of the main drivers of growth in customer numbers over the next 5 years. The mobile sector, which peaked in terms of expansion in 2004 and 2005 with growth rates of 25.2% and 25.6%, rose further to reach 2.69 billion customers in 2006, representing an increase of 23.7%. At that time, mobile penetration stood at 41.8%, a significant increase over 2005, when mobile penetration was 34.2%.

In its report, HOT TELECOM confirms that broadband will continue to be the fastest growing telecom sector, with a forecasted global CAGR of 14.0% over the next 5 years. The bulk of the broadband percentage growth will come from low broadband penetration regions such as MEA, Latin America and Eastern Europe .

When analysing the global telecom market on a regional basis, Asia is the largest region by far and now represents 45.6%, 38.4%, 40.4% and 37.1% of the world's fixed, mobile, Internet and broadband subscribers respectively. MEA will be the fastest growing region in all sectors, apart from Internet, with forecasted CAGRs of 4.7%, 18.7%, 13.8% and 34.0% in the fixed, mobile, Internet and broadband sectors respectively.

Fixed/mobile/media consolidation is picking-up pace, mainly in North America and Western Europe, where many of the main incumbents are expanding beyond their core services markets and where fixed operators are acquiring mobile or media companies in order to improve their positioning in what looks like an increasingly quadruple play (fixed, mobile, Internet and video) orientated market.

The increasing focus on IT services, content and applications for growth is bringing telcos into competition with Internet companies, system integrators, media companies and even telecom equipment manufacturers. Meanwhile, many of those groups of players have also entered the telecoms service market. In the next few years, the major players from these sectors will collide in an increasingly converging market.

Operators are also facing increased competitive pressure from system integrators such as IBM, HP and Accenture, who are entering the telco space as solutions providers capable of delivering communications as part of a wider ICT delivery project. In return, the major global carriers such as AT&T, Verizon, France Telecom/Orange, and BT will continue their pursuit of "beyond telecom" acquisitions to gain IT solutions expertise and compete with these giants.

Fixed-mobile convergence (FMC) is on everyone's lips; however few real FMC solutions are offered and service bundles are typically only joined at a pricing level. Yet, some genuine fixed-mobile convergence offerings did emerge in 2006, with dual mode phones and the seamless handoff of calls from the LAN to the cellular network. Some services, converging Internet and mobile technologies, such as soft phones on lap-tops and WiFi/mobile phones also became more prevalent. 2007 and 2008 should bring an expansion of real FMC offerings from carriers such as BT, Orange and Verizon.

As mobile operators are seeking to increase their wireless data revenue, mobile advertising has increasingly featured on carriers' agenda. Mobile advertising is unlikely to soar before 2010-2012, as it will take time to develop the high-speed networks and data-friendly handsets required to support this service, and operators have to find service models that customers are willing to accept.

Wireless broadband networks are being deployed especially in emerging markets such as Eastern Europe, MEA, Latin America and some Asian countries, where fixed networks are lacking. The deployment of WiMAX is present in low fixed penetration countries where operators use this technology to rapidly offer not only Internet, but also voice services to households. WiMAX is expected to take off in the US from 2008 onwards, but it will be a while before the appropriate networks are deployed across the country.

Find our more about the world's telecom market status and forecast in HOT TELECOM's new 57-page global report.

Find out more about this market in our new 57-page global telecom report: More info >>