Telco 2020: seeking growth beyond the core

Seizing opportunity, capturing revenue

Seeking revenue growth from adjacent services is now a common strategy for major operator groups as core telecoms revenue stagnates. But how far have operators gone, and what is the outlook in the 5G era?

GSMA Intelligence analysis shows that pay TV, media, IoT, enterprise solutions and the broader universe of digital services still account for a minor share of operator revenues (10–20% for most). There are a few exceptions at 30-40%, enabled by M&A. AT&T is the big outlier: following the acquisitions of DirecTV and Time Warner, media and entertainment accounts for around 40% of its total revenue. Operators in Japan and South Korea lead on revenue generation from adjacent services, driven by lifestyle services and finance. Chinese operators lead on growth. Meanwhile, Turkcell provides one of the broadest portfolios of digital services to consumers.

Low contributions to total revenues do not mean a low strategic importance or focus. For half of the operators analysed, non-telecoms services are the only source of growth, due to stagnating core revenues. As the 2020s near, there remains significant potential upside, particularly in the enterprise space as digitisation continues apace. The biggest challenges will be in finding the right balance of resources and efforts between defending core operations and exploring opportunities beyond the core, as well as embracing a long-term organisational culture that stimulates innovation and digital transformation.

This reports looks at operator revenues beyond the core across different perspectives. It examines the contribution of non-telecoms services to operator revenue, based on data as reported and GSMA Intelligence reclassifications and estimates. The analysis looks at who the leaders are and why, the opportunities and challenges across the main services, and the impact on profitability. It also provides an outlook by region.