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Global Telecoms - Opportunities and Challenges for the Telcos

Telecoms Investment Research Note

The telecoms industry is currently involved in a massive transformation. Since the arrival of the internet, the focus of the industry has moved from providing defined end-products to becoming a facilitator in the development of a range of new products, companies, and indeed new industries.

Unfortunately ever since this change took place, the incumbents have fought tooth and nail against these developments. They wanted to maintain their traditional products for as long as possible and mainly for that reason most have continued to defend their monopolistic structures.

They lost the internet battle with the newly-emerging digital and social media companies; and they made a similar mistake in relation to mobile broadband, where they lost the battle to the smartphone companies.

The question now is whether they will be able to embrace the developments around the digital economy. Trans-sector services such as e-health, tele-education, e-government, smart grids, IoT (M2M), all require a utilities-based wholesale infrastructure that is separated from the retail services that will be carried over them.

The IoT is the next inflection point after connecting homes (fixed lines) and people (mobile). It will increase telecoms connections to billions of devices. The telcos have an opportunity to show leadership here as well, but this could equally become another internet-like development, driven by users and the internet industry.

Latest developments:

While some of the telcos have made some incremental changes to their models there is not one anywhere in the world that has been able to transform itself to the point of being able to compete successfully in this new environment. It is often the case that the telcos are among the first to explore telecoms developments. However, it is equally often the case that they look at opportunities based on the existing business models, and these basically revolve around how much money they can make from selling new services to subscribers.


1. Synopsis
2. From benign to hard-line monopoly
3. Telco model of the future will be based on OTT
4. The end of the line for PSTN and HFC networks
5. Telecoms market is transforming but the telcos are not
5.1 Telcos lost the internet battle
5.2 Telcos also lost the mobile content battle
6. Next on the chopping block – the infrastructure
7. So what is next for the telcos?
7.1 IoT and M2M: the next frontier
7.2 Is bandwidth the new growth market for the telcos?
7.3 Wi-fi and the role of the telcos
7.4 Rebalancing telco infrastructure investments
8. Conclusion
9. Related reports
Table 1 – Visitors to top web properties worldwide – 2013
Table 2 – Worldwide - broadband market share by access technology – 2010 - 2012
Table 3 – Global smart phone operating system market share – 2010; 2011; 2012
Table 4 – Top ten carriers worldwide by revenue – 2012
Table 5 – Top ten carriers worldwide by revenue – 2010; 2011
Table 6 - Bharti Airtel mobile ARPU – 2004 - 2005; 2007 - 2012
Exhibit 1 – Apple iPhone and Apple iTunes
Exhibit 2 – Telstra leading the global telco move towards the OTT model
Exhibit 3 – Digital economy – key developments
Exhibit 4 - Major shareholders in Bharti Airtel – April 2012

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