Operator revenue diversification: growth beyond core continues as Covid-19 spurs digitisation

Revenue diversification has become a strategic focus for major operators in recent years, with services beyond core (a growing and diverse range of B2B and B2C services) now a key component of growth stories. The goal is twofold: to offset stagnating or declining core telecoms revenues and to capture incremental value from new growth areas such as digital services and platforms.

But how far have operators gone? From a financial perspective, there is often scepticism about operator success beyond core telecoms. However, our research – based on rigorous and consistent analysis of the financial results of major operator groups – shows that operator revenue diversification is real. The average contribution to total revenues of services beyond core reached 24% in 2020 for the operators analysed, up from 18% in 2017. For two thirds of such operators, services beyond core were the only source of revenue growth. The Japanese and South Korean operators lead on diversification, but China is catching up. 

Covid-19 has proved to be a catalyst. The pandemic has accelerated the shift to digital for consumers and enterprises, fuelling further growth beyond core. In the enterprise market, demand for value-added services, particularly cloud and security, grew significantly as enterprises sped up their digital transformation.

This report analyses operator progress and achievements beyond core telecoms, the speed of growth, the impact of Covid-19 and the key trends and drivers by region and service.