Telecom Trends to Watch: 5G, AI, Cloud, and IoT



We see the global telecom industry undergoing an ongoing transformation in industry trends. In 2019, this market witnessed rapid changes, especially with the advent of 5G (fifth-generation) technology. These changes are a crucial piece of supporting the interlinked, Internet-based economy.

Further, this shift is primarily steered by the continuous developments and technological improvements deployed in big data analytics, AI (artificial intelligence), cloud computing, M2M (machine-to-machine learning), and IoT (Internet-of-Things).

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Usually, we see the telecom companies allocating and spending a huge amount of money on an annual basis. These investments dominate the industry’s total capital expenditure. Of these investments, fiber-based projects take up a huge portion. In recent years, we have witnessed an expansion in capital expenditures, as these companies incur expenses on the basic facilities and capital equipment required for 5G technology.

Telecom industry: Recent 5G trends

Why is there a demand for 5G among consumers? Consumers and businesses have access to a vast array of video applications, leading to a massive huge dependency on Internet connectivity. This increasing usage of the Internet among used has sparked their appetite for higher-speed services.

According to Statista, the mobile industry is expected to double from around 4.5 billion total mobile subscribers worldwide to 7.6 billion. Further, 5G wireless subscriptions are projected to reach 545 million by 2022.

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Changing revenue and earnings model with the advent of 5G

The conventional revenue model of telecom companies involves revenue from subscriptions. So, these companies aim to expand their customer base and offer the best services at a reasonable price. Them, the telecom players fight for visibility among the customers by offering lower prices for a variety of bundled services and different plans, decreasing the ARPU (average revenue per user).

In this process, the companies trim their prices relative to their peers and end up hurting their margins. So, to maintain stability in this cutthroat market, these companies ideally seek to extend their limits and tap new opportunities.

With the advent of 5G, there are other appealing business opportunities available for the telecom companies. According to Deloitte’s 2019 Telecommunications Industry Outlook, the fixed broadband market, B2B (business-to-business) segment, and IoT present more revenue-generating opportunities to telcos.

According to the report, the telecom players would also have the chance to make use of “network slicing” to model their offerings. The Deloitte report added, “In the context of 5G, this will enable sharing of a given physical network to run IoT, mobile broadband, and very low-latency applications—including many connected-car and connected-home functions that have the potential to create entirely new revenue sources for providers in 2019.”

In the context of the connected-car concept, AT&T was a pioneer telecom company to launch a connected car research center in October 2018.

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Opportunities in telecom

Taking into consideration the competitive telecom market, these players prefer to indulge in strategic mergers and acquisitions. This could help them consolidate their position in the market as well as extend their product lines to various related product lines. Plus, the Deloitte report identifies two key income-producing approaches for telecom providers—mHealth and mPayments.

In the context of mHealth, telecom operators can make money by increasing the number of subscribers who use healthcare-centric wearables. One of the many mHealth services is to allow users to make sure that they are taking the right amount of medications. Among the leaders, AT&T, Vodafone, and Telefonica provide mHealth offerings to their customers.

The mHealth apps market could progress at a 44.7% CAGR (compound annual growth rate) from 2019 to 2026, according to Research and Markets. Moving on to mPayments, the growing adoption of digital payments has created an integration opportunity for mobile operators. They can multiply their earnings by integrating mobile devices, applications, different mobile payment options, and identity management. According to ACI Worldwide, this strategy may enable telecom players to multiply their revenue from mobile payments by at least fourfold by 2022.

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Risks in telecom

Despite plenty of opportunities available for the few select players in the market, there are also risks present. The returns on the heavy investments these companies are making on 5G developments are unpredictable, as 5G is still in the seed stage.

Moreover, companies haven’t completely realized the synergies from strategic mergers and acquisitions. According to EY Global Telecommunications, a majority of the telecom companies have achieved synergies lower than what they identified, especially the revenue synergies.

Further, there is always the issue of the changing regulatory framework—especially with respect to spectrum launch and data protection policies. In October, the European Union detected a string of security threats caused by international telecom equipment providers. The EU is specifically concerned about the offerings of Huawei Technologies, a China-based global supplier of telecom equipment.

The global telecom industry is consolidated, meaning that a small number of companies dominate this huge industry. Let’s look at some of the global telecom companies that have a market capitalization of more than $30 billion.

China Mobile Ltd.

China Mobile Ltd. (CHL) is a telecom giant that holds about 60% market share in the domestic wireless network market. According to the company’s annual report, it had more than 925 million customers at the end of 2018, a 4.3% YoY (year-over-year) increase. As a result, it’s the leading global telecommunications company. 

The firm’s market capitalization totaled more than $168 billion as of November 2019. The company recorded revenue of $105.3 billion in 2018. In early November, China Mobile was already offering 5G services to its customers. The company’s 5G package costs 128-599 yuan per month. The most economical package at 128 yuan includes 30 gigabytes of data and 500 minutes of call time.


AT&T (T) is a leading US-based telecom provider and one of the largest in the world. It had a market capitalization of more than $284 billion in November 2019. The company offers voice services to its customers in more than 200 countries.

AT&T had nearly 153 million total wireless subscribers in 2018, an 8% YoY increase, according to its latest annual report. The company recorded revenue of more than $144 billion as of 2018. Further, it expanded its global presence and product line through acquisitions. These strategic acquisitions enabled the company to offer its customers a package of different services.

AT&T was among the many players to launch 5G services in certain cities in the US in 2018. The company plans to extend these services across the US by the end of 2019.

Vodafone Group Plc

Vodafone Group Plc (VOD) is a major UK-based telecom company providing mobile operation services in 24 countries. It has partnerships in 42 more countries. At the end of June, the company was serving more than 600 million mobile customers and nearly 21 billion fixed broadband customers.

Vodafone’s market capitalization reached more than $54 billion in November 2019. It recorded revenue of $49.4 billion in fiscal 2019, which ended in March. The company performed strategic acquisitions from 2012 to 2014, strengthening its position in the highly consolidated telecom industry.

The company initiated 5G services in Germany in July 2019. For the first year, the company’s 5G plans start at 14.99 euros per month. It also has an unlimited 5G data plan priced at 80 euros. This is cheaper when compared to Deutsche Telekom, as its German competitor charges 85 euros for the same plan.

SoftBank Group

Founded in Japan, SoftBank Group emerged as a packaged software distributor. The company later become involved in the Japanese domestic telecommunications segment.

SoftBank Group’s market capitalization was $82 billion in November 2019. Like AT&T, this company also grew primarily through acquisitions. In early 2019, it expanded its holdings to an 84.7% stake in Sprint, the US telecom services provider. Further, the company expects to deploy its 5G services in early 2020, ahead of its competitors.

Deutsche Telekom AG

Deutsche Telekom AG is a German player that provides telecom services in more than 50 countries. The company reports that it has more than 175 million mobile customers.

Deutsche Telekom AG had a market capitalization of $82 billion in November 2019. It recorded revenue of $83.9 billion in 2018. The company realizes nearly 67% of its revenue from outside Germany.

Deutsche Telekom aims to set up well planned and structured networks that match future broadband requirements. In early 2019, its 5G services debuted in six cities in Germany. Over the coming months, it is expected to expand to more than 100 locations in Germany.

Telefonica S.A.

With a presence in 21 countries, Spanish telecom services provider Telefonica S.A. (TEF) is one of the largest in the world. Its products include mobility services, cloud computing, and security services. Moreover, its customer base totals more than 316 million.

Telefonica’s market value was nearly $39 billion in November 2019. Since 2017, the company has been expanding its business. In early 2018, the company, along with Nokia and Ericsson, presented their plans for 5G services in two cities in Spain. Notably, its commercial introduction of 5G services is expected to occur by 2020.


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