Telecom and Pay TV Revenues Soar, but RAN Revenues Remain Stagnant for a Decade

Worldwide spending on telecommunication and pay TV services is expected to reach $1.55 trillion in 2023, representing a 3.0% increase from 2022, according to a report by IDC. The primary driver behind this growth is inflation. However, the report also highlights some interesting regional trends.

The Middle East and Africa (MEA) and Latin America are experiencing above-average forecast revisions. This can be attributed to hyperinflation in countries like Turkey, Uganda, Egypt, and Argentina. In these countries, it has become common to see quarterly ARPUs (average revenue per user) grow by more than 50% on a yearly basis.

On the other hand, expectations for the telecom services market in Western Europe have been slightly lowered. This is mainly due to a worsened economic environment in key countries, including Germany. IDC believes that this could be an indication of a new market force emerging, which may put pressure on current growth rates and gradually bring them down towards the end of the forecast period.

When analyzing the growth of telecom services by country, it becomes evident that different factors are at play. In some countries, regulators allowed telecom operators to increase their tariffs, resulting in healthy service revenue growth. However, this move also led to an accelerated migration of customers to cheaper tariff packages and operators, resulting in lower value growth rates compared to the nominal tariff increases.

In other countries, such as Italy, the competitive landscape prevented operators from making any tariff adjustments. Additionally, in developing countries in Eastern Europe and Africa, tariff increases were hindered by the low purchasing power of the population.

Despite these variations, certain trends remain consistent. Mobile services continue to be the largest segment, driven by the growth in mobile data usage and machine-to-machine (M2M) applications. This offsets the declines in spending on mobile voice and messaging services. The fixed data services segment is also expected to grow, fueled by the demand for higher bandwidth services. However, spending on fixed voice services is projected to decline as TDM voice revenues decrease and are not fully offset by the increase in IP voice.

The traditional Pay TV market is anticipated to experience a slight decline over the forecast period due to the rising popularity of video on demand (VoD) and over the top (OTT) services. Nevertheless, these services will remain an important part of the multi-play offerings of telecom providers worldwide.

In terms of radio access network (RAN) revenues, Dell'Oro predicts a 1% compound annual growth rate (CAGR) between 2020 and 2030. This follows a 2% CAGR during the 4G era. The assumption is that RAN revenues peaked in 2021 and will gradually decline before picking up momentum in the later part of the forecast period.

Overall, the forecast for global telecom and pay TV spending indicates steady growth, with regional variations and evolving market forces shaping the industry's trajectory.