Industry Insights - Iskratel
4. 9. 2019

In what shape is the European telecom industry?

In one of our recent posts, we already spoke about what trends on the horizon will transform the telecom industry. This time, we have decided to press the pause button for a moment, and look more thoroughly into the current condition of the telecom industry – in particular, European industry. How healthy is it, what are its top trends, where is it headed and what are some of the biggest challenges?

What do the numbers say about the European telecommunications industry?

According to Etno’s annual report, today’s network speeds in Europe are still higher than the global average, which is somewhat expected, given that European operators were always at the forefront when there was a need for network development.
When looking at telecom investment and spend, however, the European region appears less healthy than its global peers, the report says. One of the possible reasons for that is that Europe is already covered with a very dense and fast network. Many European operators are therefore still focused on getting the best return from the money they had invested in their 4G networks, rather than investing it in new technologies – which is different than in the US or China where cell towers are more sparsely distributed and the demand for a higher capacity network is much higher than in Europe.
Those  countries are expectedly moving fast toward implementing 5G. Particularly China, who views 5G as a key to becoming a tech leader not just in wireless but in the Internet of Things and artificial intelligence as well.

So without the consumer demand and overcapacity on current networks, can European operators justify launching wide-scale 5G across Europe? The question is even more important in the light of the realization  that operators still do not know how to monetise on 5G.

Running in place with implementing 5G could have dire consequences for Europe as it could leave Europe’s traditional industries at a competitive disadvantage.
But with or without it, Europe still has its own challenges it needs to overcome, such as:
  • Europeans use fewer telecom services in contrary to users from other parts of the world (Etno’s report).
  • The decline in revenue from traditional communication is increasing. 
  • European telco market is quite fragmented with more than 120 major operators scattered across 28 member states, which triggers intense competition and price wars.

In light of these circumstances, it is not surprising that major European telecoms have begun to buy smaller operators and cable networks in order to expand their offer and compete with over-the-top digital natives that are entering the core telco market with innovative business models and technologies. And this consolidation in global and regional markets will continue in the next three years.

In conclusion, European telecom industry is in good health but it will need to keep moving away from just providing faster network speeds to consumers, and towards enabling a whole range of new services and technologies to support the digital transformation of European industry and society. There are many adjacent market opportunities where telecoms should use their digital business capabilities and focus to gain market share and create new revenue. Current hype around 5G is a good opportunity to develop new vertical markets and business models while even reusing some of the existing assets.