IDC Forecasts Slower Growth for Global Telecommunications Services Market: Could AI Help Telcos to Maintain Healthy Margins?
May 03 2024 - 1:01PM
Business Wire
Worldwide spending on Telecom Services and Pay TV Services
reached $1,509 billion in 2023, an increase of 2.1% over 2022,
according to the International Data Corporation (IDC) Worldwide
Semiannual Telecom Services Tracker. IDC expects worldwide spending
on Telecom and Pay TV services will increase by 1.4% in 2024 and
reach a total of $1,530 billion.
In terms of value, the progress of the global market slowed
during the latter half of 2023 as the growth rate recorded for the
full year was approximately one percentage point lower than IDC's
previous forecast. This deceleration primarily resulted from
slower-than-anticipated progress in the Americas, where a
combination of sluggish economic growth, relatively high inflation,
and saturated markets created an unfavorable environment for market
development. However, in the Europe, Middle East, and Africa (EMEA)
region, which faced similar economic issues but where telecom
operators were allowed by the regulators to increase their tariffs
in line with inflation using a Consumer Price Index (CPI) model,
the market grew somewhat faster than expected. It's important to
note, however, that these tariff adjustments also led to an
accelerated migration of customers toward cheaper tariff packages
and more affordable operators, so the actual value growth rates
were typically less than half of the nominal tariff increases.
Global Regional Telecom Services
Revenue and Year-on-Year Growth (revenues in $B)
Global Region
2022 Revenue
2023 Revenue
2023/2022
Growth
Americas
$571
$574
0.5%
Asia/Pacific
$467
$481
3.0%
EMEA
$439
$454
3.3%
Grand Total
$1,478
$1,509
2.1%
Source: IDC Worldwide Semiannual Services
Tracker - 2H 2023
The five-year outlook for the global connectivity services
market remains positive, albeit slightly less optimistic than the
previous forecast. Key central banks in the U.S. and Europe have
repeatedly postponed decisions to decrease reference interest
rates, impacting the potential for a more robust economic recovery.
Consequently, the market environment is expected to remain
relatively unfavorable for several more years. Persistent inflation
will continue to affect the purchasing power of end users but will
also prompt many telcos to implement upward tariff adjustments.
However, as inflation will continue to gradually decrease, the
positive impact of these future tariff increases should diminish
over time. The unstable political situation, fueled by conflicts in
Eastern Europe and the Middle East, adds further uncertainty and is
likely to dampen growth rates. In the Asia/Pacific region, slower
growth can be attributed to the cooling down of the Chinese
economy. Nevertheless, positive trends are anticipated due to
expected healthy growth in India and other developing markets.
A graphic illustrating IDC's 2023-2028 forecast for the
worldwide telecom services market by region is available by viewing
this press release on IDC.com.
An analysis by service type confirms that well-established
trends persist, even in the face of changes in top-line forecasts.
The mobile segment continues to be the largest, driven by the
growth in mobile data usage and Machine-to-Machine (M2M)
applications. This growth offsets declines in spending on mobile
voice and messaging services. Additionally, the fixed data services
segment continues to grow due to the increasing demand for
higher-bandwidth services. However, spending on fixed voice
services is projected to deteriorate over the forecast period as
the decline in traditional voice revenues is not fully compensated
for by the increase in IP voice. Despite a slight decline in the
Pay TV market due to the rising popularity of Video on Demand (VoD)
and Over-The-Top (OTT) services, these offerings will remain an
essential part of telecom providers’ multiplay services.
It is obvious that the development of the connectivity services
market remains very slow, and the anticipated growth of the telcos'
revenues is way too low to keep their owners happy. "With the
emergence of Artificial Intelligence (AI) and advanced analytics,
the telecom operators have obtained a new powerful ally that should
help them modernize their business operations and improve
efficiencies," said Kresimir Alic, research director, Worldwide
Telecom Services at IDC. "Our research has already identified a
huge number of use cases including customer service chatbots,
virtual assistants, and field technicians, as well as the usage of
AI for network modernization and predictive maintenance, network
traffic management, personalized marketing, fraud detection and
prevention, churn predictions, and revenue assurance. These
enhancements, together with many others that will be invented soon,
should undoubtedly help telecom operators to streamline operations,
enhance customer experiences, and stay competitive in this rapidly
evolving industry."
About IDC Trackers
IDC Tracker products provide accurate and timely market size,
vendor share, and forecasts for hundreds of technology markets from
more than 100 countries around the globe. Using proprietary tools
and research processes, IDC's Trackers are updated on a semiannual,
quarterly, and monthly basis. Tracker results are delivered to
clients in user-friendly Excel deliverables and on-line query
tools.
For more information about IDC's Worldwide Semiannual Telecom
Services Tracker, please contact Kathy Nagamine at 650-350-6423 or
knagamine@idc.com.
Click here to learn about IDC's full suite of data products and
how you can leverage them to grow your business.
About IDC
International Data Corporation (IDC) is the premier global
provider of market intelligence, advisory services, and events for
the information technology, telecommunications, and consumer
technology markets. With more than 1,300 analysts worldwide, IDC
offers global, regional, and local expertise on technology, IT
benchmarking and sourcing, and industry opportunities and trends in
over 110 countries. IDC's analysis and insight helps IT
professionals, business executives, and the investment community to
make fact-based technology decisions and to achieve their key
business objectives. Founded in 1964, IDC is a wholly owned
subsidiary of International Data Group (IDG), the world's leading
tech media, data, and marketing services company. To learn more
about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC
and LinkedIn. Subscribe to the IDC Blog for industry news and
insights.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240503633942/en/
Kresimir Alic +385 1 304 0052 kalic@idc.com
Michael Shirer +1 508-935-4200 press@idc.com