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Better products, higher sales … lower revenues

Telcos in Spain have lost 30% of their revenues in the last decade, in spite of a 50% growth in broadband and 8% growth in mobile customers. Image credit: Expansión

I read the article on the Expansion newspaper, but you don’t need to go into it: the title says it all.

Telecommunications Companies have lost one third of their revenues in the last ten years

And the subtitle points out that these losses are in spite of a 50% surge in broadband connections and an 8% increase in number of wireless lines.

The article is about the Spanish market but the situation is much similar in several other mature markets in Western Europe.

Global Mobile Data traffic growth 2014-2020, measured in EB per month. Image credit: Ericsson

According to the last Ericsson report  with data from the 2020 Q3 period the amount of traffic on mobile network has grown by 50% in the previous 12 months (on the fixed network it grew even more, courtesy of the teleworking forced by the pandemic).

If you look at the graphic you see the global growth of data traffic (the voice traffic is stable and it is a small percentage of the data traffic, also considering that a growing portion of the voice traffic is part of the data traffic) over the last 7 years. An increase of 20 times over that period.
Yet, Telcos revenues have decreased and to put the cherry on the cake, Telcos have been investing quite a lot of money in the same period to deploy 4G, thus providing more capacity and much better experience to their customers.
In any other sector if you say:

  • products are getting better and better
  • companies are investing more and more money to increase the offer quantity and quality
  • sale volume is increasing
  • usage is skyrocketing

you would expect to see a matching revenue increase! Yet, that is not so in the Telecom market. Don’t expect this trend to change because of 5G, actually it might get worse as potentially new players (in the private 5G area) may further erode the Telcos market.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the Industry Advisory Board within the Future Directions Committee and co-chairs the Digital Reality Initiative. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.