Future of telco

Over the years, telcos have been trying to break into high value-added services through massive investments like professional services, media and digital advertising. However, the track record for such investments remains mixed as newer options emerge. For example, some telco players believe there is immense potential in offering private 5G networks for small and medium-sized businesses (SMBs) like car dealerships and hospitals.

Consumers are increasingly expecting enhanced ease of use and more flexible telco services with greater transparency in billing. Meanwhile, commercial and B2B clients are looking for increasingly sophisticated connectivity and data solutions without the traditional requirements of contacting a call center or sales representative to rectify issues. To meet evolving consumer demand, telcos are focusing on improving the quality of the consumer experience by creating more automated and intentional experiences. 

As the telco landscape evolves, so will the competition between telcos and hyperscalers. This will pose new threats to telcos, given the massive spending capabilities of hyperscalers. To address this trend, some telcos are forming partnerships with hyperscalers to leverage networks and services for a competitive edge. 

The rise of interest rates will raise the cost of capital, impacting telcos’ borrowing capacity and access to fresh capital. Telcos with weaker balance sheets could be at a higher risk of potential financial distress. As a result, many telcos are reexamining their capital plans including infrastructure upgrades to the deployment of new 5G capabilities.

Technology investments will remain costly for network upgrades. The cost of deploying 5G to satisfy the bandwidth needs of residential consumers has been largely prohibitive. Similarly, investment in 6G would require massive capital and is estimated to take place within the next three to five years. Telcos can focus on improving their network using evolving tools like AI and machine learning for service and operating improvements.

The high cost of energy is forcing many telcos to realign their energy decarbonisation plans and efficiency investments. Three-quarters of telco leaders say they are already investing in decarbonisation initiatives. Telcos can take the first step towards net zero pathways by consolidating their real estate and retrofitiing their facilities with energy-efficient infrastructure. 

Most carriers have spent millions complying with the General Data Protection Regulation (GDPR) and other global privacy statutes. These policies will continue to mandate carriers to establish more robust privacy and cybersecurity controls across their networks, applications and operations than ever before.