The traditional telecommunications business is becoming less lucrative and companies in the sector must move towards offering technological services that allow them to differentiate themselves and define a new model. This is the conclusion of the latest report by the consulting firm Oliver Wyman, The Future of B2B Telco, published this past week.
It shows that connectivity is ceasing to be a differentiating element and becoming just another “commodity”. That is, in a basic way such as other supplies such as electricity, water or gas that reaches homes. “Fixed voice revenues are declining between 8% and 15% annually, depending on geography, and data and mobile connectivity revenues are barely growing between 1% and 3% per year,” the report states.
The stock market evolution of the sector deepens this vision after years of decline. But, as a good early indicator of economic events, the telecommunications sector once again gained some strength in the stock market in the last months of 2023 and the first months of 2024, seeing light at the end of the tunnel. “The technological services market has grown by around 10.5% annually and it is expected that by 2027 they will gain another four percentage points of market share, reaching 87%.
Where a whole world of possibilities opens up for traditional telecoms to transform their businesses is in cybersecurity, management of cloud services, supervision and integration of connectivity and organization of data in a secure way. There is also clear ground in edge computing (management and storage of data closer to where it is generated to allow for near real-time responses) and in the Internet of Things. “Change is not without challenges, from sales and relationships with customers, new competitors or different levels of profitability,” says Augusto Baena, Communications, Media and Technology partner at Oliver Wyman.