The future of telco

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The global telecommunications industry is experiencing a declining and sluggish growth.

A study by PwC Global revealed that between 2023 and 2028, revenues from fixed broadband, mobile, and fixed voice subscriptions will grow at a projected compounded annual growth rate (CAGR) of 3.8 percent, 4.3 percent and decrease by 1.8 percent, respectively.

Telecoms service average revenue per user (ARPU) is expected to continue to decline over the next five years, with mobile ARPU falling at a CAGR of -1.3 percent, fixed broadband ARPU relatively flat at a CAGR of -0.1 percent, and that of fixed voice ARPU seeing a stronger decline at a CAGR of -4.7 percent.

It noted that the industry is currently in a situation where almost all the cash it generates is absorbed by capital expenditures, dividends, and servicing debt, thus, leaving very little for investment in innovation of enhanced customer experience.

The report pointed out that the telecoms industry continues to face a fundamental challenge – that its core products and services are becoming commodities, meaning it has difficulty raising prices while it faces a continual need to invest in infrastructure.

But it emphasized that even in industries with relatively slow growth, there are always niches of expansion and opportunities for companies to improve their bottom lines. It said that by 2028, there will be an additional $200 billion in incremental revenue growth up for grabs across the sector, but this picture puts even more pressure on players in the telecommunications system to find new ways of creating value from existing revenue flows.

One opportunity for value creation, it said, lies in the business-to-consumer services segment. Telecoms, it noted, have a powerful new tool in artificial intelligence, especially GenAI, which can be deployed to help take cost and friction out of the B2C business, protect margins, and improve customer experience through AI-enabled personalization at scale.

Meanwhile, 5G is expected to account for nearly two-thirds of mobile subscriptions, with subscriptions seen quadrupling from 1.79 billion in 2023 to 7.51 billion in 2028, with its share of total mobile subscriptions more than tripling, rising from 18.8 percent in 2023 to 64.1 percent in 2028.

One high-potential area, the report said, is fixed wireless access (FWA) broadband services for the home, offered as an alternative to cable and fiber landline internet services, and which has the potential in many large markets globally to fill a gap in the urban-to-rural broadband coverage continuum. FWA connections are expected to be the fastest-growing broadband technology through 2028, rising at a CAGR of 18.3 percent. By 2028 however, FWA’s 99 million subscriptions will still account for only about six percent of the total global broadband subscription market of 1.61 billion.

The report likewise revealed that cellular Internet of Things (IOT) over mobile networks are growing across all territories. In terms of industry uptake, the automotive and mobility sector is leading. “Every new electric vehicle, more than 17 million of which were sold in 2024, is essentially a mini data center that comes with connectivity built in. A projection by the IEA indicates that the global electric vehicle fleet is set to grow at a CAGR of 23 percent between 2023 and 2035 while overall IOT revenue in the automotive industry is projected to more than double between 2023 and 2028 to reach $34.1 billion, rising at a CAGR of 15.8 percent,” the report added.

It further noted that as the AI grid takes shape, telcos are uniquely positioned to lead the way since they know how to deploy and operate network and grid infrastructures at national scale. “They own or lease a huge amount of legacy real estate in relevant places, which can be repurposed or reinvented in aspects such as energy storage. They know how to densify networks. And they run the connectivity that provides them with data and a unique spider-in-the-web position from which to optimize load balance and orchestrate the AI grid system. Building the AI grid is more than just a business opportunity for telcos and other participants in the connectivity and compute ecosystem. It presents a platform for fundamental reinvention and growth and a proof point of the sector’s capacity to enable all the other domains of growth,” it said.

In another report, this time by McKinsey & Company, it was observed that the massive capital required to develop and maintain increasingly sophisticated telecom networks has taken its toll, with the industry seeing its return on invested capital and shareholder returns steadily declining, even as tech companies have harnessed telecom infrastructure to generate unprecedented value creation through the broadband and smartphone revolutions.

A report by Kearney identified a number of telco trends in 2025, a year which it said would deliver several significant technological advancements and strategic shifts across the industry worldwide.

One is generative AI, which it noted, is already transforming the telco business model, with no signs of abating. It said that many providers have employed them in crucial back-end processes such as network optimization and that many telcos believe that AI also has the potential to significantly enhance customer experiences as AI can help telcos offer a more personalized user experience, support target marketing and improved customer experience by providing rapid and accurate insights into customer behavior including buying and usage patterns.

Second is in the area of alternative connectivity methods. It said that by 2030, fixed wireless access technology connections are expected to grow from the current 160 million to 350 million while data traffic is projected to increase nearly fivefold to 150 exabytes by 2029. The Kearney report pointed out that FWA is an attractive option for telcos as it provides quality connectivity in low-density areas without significant capex. Satellite communications which is already a $12 billion market is also predicted to grow at a CAGR of seven percent by 2030, driven primarily by applications across broadband, public service, and the aviation market.

A Forbes article meanwhile revealed that one key trend shaping the future of telco is voice technology evolving beyond traditional call functionality, incorporating innovating use cases powered by AI and machine learning from enhanced fraud prevention to improved customer interactions.

It pointed out that the future is still bright for the telco industry as it enters an exciting era of transformation and innovation with a chance of creating a new era of connectivity – one that is more agile, inclusive and forward-thinking than ever before.

Is the Philippine telco industry up for the challenge?

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