Telcos take greater slice of ICT pie as service provider revenue grows

Telecoms service providers will grow their revenues from global services to enterprise customers to more than US$297 billion by 2020.

According to a new forecast from independent global analyst firm Ovum, the biggest contribution will come from new strategic ICT services revenues at nearly US$173 billon, which will increase at a CAGR of 9.9 per cent over the period 2015-20.

Strategic ICT services include business IT and IP applications, compute and hosting, enterprise mobility, managed networks, professional services, and unified communications.

Findings suggest that they represent the new generation of dedicated IT and IP communications services that telecoms service providers are able to offer under contracts with enterprise customers.

“Telcos have relied on adapting traditional voice and data services to serve increasingly complex enterprise business users, but now have a powerful range of ICT services that have been integrated across the operators’ global networks,” says David Molony, principal analyst in Ovum’s enterprise practice and author of the report.

“Telco revenues from strategic ICT services are growing faster and, according to our calculations, will overtake legacy service revenues in 2018.”

By definition global services means there are prospects for growth worldwide, but regionally the growth areas for telco strategic services are in Latin America (17.8 per cent CAGR), Africa (17.5 per cent), the Middle East (16.4 per cent), and Central Asia (13.0 per cent).

For Molony, the big markets of 2015 - Europe and North America - will grow more slowly, but will still be the largest in 2020.

In addition to growing their service portfolios, Molony says more telcos are offering enterprise managed services through dedicated business units or divisions.

Furthermore, they are also increasingly challenging (as well as partnering with) systems integrators and IT services providers in the large enterprise sector.

“Telcos have taken more than 14 per cent of the global ICT services market in the last couple of years,” Molony adds.

“We expect that share to reach more than 18 per cent by 2020.”