According to a report by International Data Corporation (IDC), telecom service providers in Europe, the Middle East, and Africa (EMEA) are seeking new ways to supplement sub-inflation-level growth. IDC attributes the acceleration in spending to the increase in tariffs of telecommunication services fueled by inflation. IDC forecasts that EMEA spending on telecom and pay TV services will increase by 2.7% this year, reaching a total of $461 billion. Telecom providers are transforming from traditional commodity-style services to modern full-stack technology suppliers, hoping that the migration to all-IP and new-generation access broadband and the use of 5G technology will help offset the decline in revenue from fixed and mobile voice services.
- Telecom service providers in EMEA are seeking innovative ways to supplement sub-inflation-level growth.
- Spending on telecom services and pay TV services in EMEA increased by 2.4% YoY in 2022, reaching $449 billion.
- Telecom providers in Europe are transforming from traditional commodity-style services to modern full-stack technology suppliers.
When was the last time you noticed your phone bill increasing? If you live in Europe, the Middle East, or Africa, it might have been recently. According to the International Data Corporation (IDC), telecom service providers in the EMEA region are raising tariffs on telecommunication services due to inflation. But it’s not all bad news. In fact, this increase in tariffs is driving the industry towards innovation and transformation. Telecom providers are looking for new ways to supplement sub-inflation-level growth, and the IDC has some insights on what that might look like.
Reasons for Optimism
IDC attributes the acceleration in spending to the increase in tariffs of telecommunication services fueled by inflation. According to the latest IMF forecasts, inflation will continue for at least the next three years. This means that operators will continue to increase tariffs, clients will be paying more for services, and the total nominal value of the market will be growing at a faster pace. For these reasons, IDC has revised its forecast upward, not only for 2023 but for the entire first half of the forecast period. This is slightly more optimistic compared to the version published in November last year.
The State of Telecom Services Spending in EMEA
In 2022, spending on telecom services in Europe increased by 1.1% year on year. This relatively low level of growth was mainly the result of two factors: the war in Ukraine and related economic sanctions imposed on Russia, the biggest market of the CEE subregion, and significant slowdown of the major Western Europe (WE) economies due to the drastic growth of interest rates. On the other hand, telecom services spending in the MEA subregion posted healthy growth of 5%, fueled by the lower saturation of markets in the less-developed countries of Sub-Saharan Africa.
The telecom industry is undergoing a significant shift in the EMEA region. The increase in tariffs due to inflation has led to new investments in advanced technology and a focus on innovation.
Transformation of Telecom Service Providers
Telecom service providers in Europe are expected to continue investing in advanced telecommunications technologies despite current and forecast inflation. They hope that the migration to all-IP and new-generation access (NGA) broadband will help offset the decline in revenue from fixed and mobile voice services. They also expect 5G to unlock new opportunities by allowing massive machine-type and ultra-reliable low-latency communications.
European companies are also accelerating the pace of digitalization and “software-ization” of their business processes. They are creating new go-to-market strategies based on data and intelligence and new innovative business models based on telco-as-a-platform and co-creation within ecosystems. “Telecom operators are completely transforming – from providers of traditional commodity-style services to modern full-stack technology suppliers,” says Kresimir Alic, research director with IDC’s Worldwide Telecom Services.
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.
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 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC’s analysis and insight help IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives.
Final Thoughts
The telecom industry is undergoing a significant shift in the EMEA region. The increase in tariffs due to inflation has led to new investments in advanced technology and a focus on innovation. Telecom providers are no longer just providers of traditional services but are transforming into modern full-stack technology suppliers. The use of 5G technology and the migration to all-IP and new-generation access broadband are just some of the ways these companies are supplementing sub-inflation-level growth. With the help of IDC’s Tracker products, IT professionals and business executives can make informed decisions and achieve their business objectives in a rapidly changing industry.
FAQ
Q: What is the current state of spending on telecom services in EMEA?
A: Spending on telecom services and pay TV services in EMEA increased by 2.4% year on year in 2022, reaching $449 billion. IDC forecasts that EMEA spending on telecom and pay TV services will increase by 2.7% this year and reach a total of $461 billion.
Q: What are the reasons for the acceleration in spending on telecom services and pay TV services in EMEA?
A: IDC attributes the acceleration in spending to the increase in tariffs of telecommunication services fueled by inflation.
Q: What is the forecast for spending on telecom services and pay TV services in EMEA?
A: IDC forecasts that EMEA spending on telecom and pay TV services will increase by 2.7% this year and reach a total of $461 billion.
Q: What is the reason for optimism in the telecom industry in EMEA?
A: The increase in tariffs of telecommunication services fueled by inflation is a reason for optimism for the telecom industry in EMEA.
Q: What are some innovative ways that telecom providers in EMEA are looking to supplement sub-inflation-level growth?
A: Telecom providers in Europe are expected to continue investing in advanced telecommunications technologies such as the migration to all-IP and new-generation access (NGA) broadband, and the use of 5G technology.
Q: What are IDC Trackers?
A: 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.
Q: What is the role of IDC in the technology industry?
A: 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.
Q: How can IDC’s analysis and insight help businesses?
A: IDC’s analysis and insight help IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives.
