As the new year clicks into gear, professional services and consultancy Deloitte has reported an emerging set of issues and opportunities that may influence the telecom landscape, including new capital sources to accelerate fibre and 5G growth, a more holistic approach to sustainability, climate, and equity (SC&E), and consumer conundrum impacting 5G monetisation.
2022 saw major telcos in the leading economies – such as BT in the UK and AT&T in the US – pull back from previous strategies of offering all-encompassing services including video entertainment to focus on core business, in particular fibre and 5G network.
Deloitte said that while the macroeconomic environment may become more challenging and hinder traditional sources of capital in 2023, the overall communications sector appeared to be attracting new investors who increasingly recognise the strategic importance of telecom connectivity in the digital economy.
Deloitte said these investors are increasingly allocating investments using alternative deal structures such as joint ventures, partnerships, infrastructure sharing, and other innovative yet often more complex arrangements that can help telcos reduce the capital burden in deployments of fibre and 5G networks.
Recognising the strategic importance of fibre and wireless connectivity in a digital economy, Deloitte noted that new investors – infrastructure funds, private equity, sovereign wealth funds, REITs and others – are increasingly allocating investments to the communications sector. Yet given new sources of capital and investment options, it suggested companies may need to re-evaluate how they best attract and allocate capital, and may need to adopt new methods to evaluate alternative deal structures.
Another key challenge to operations, and subsequently delivery of services to customers, is the ongoing transition of telcos to techcos, seeing them modernise their networks as well as customer-facing and back-office systems. In doing so, they seek to create more flexible and scalable business and operating models that can help bolster margins and expand revenue opportunities. But, said Deloitte, this transition is not easy given that it involves multiple simultaneous initiatives that require close coordination and integration, and critical strategic decisions that have long-term implications across numerous domains.
Another issue for the industry is how to monetise the billions spent on 5G spectrum and network deployments. For Deloitte, a big part of the problem is that to get 5G to market faster, operators began rolling out and marketing 5G using temporary implementations that lacked the full potential performance of “true” 5G, resulting in consumers erroneously concluding that 5G doesn’t make a real difference. The key question, said Deloitte, was how can telcos differentiate and charge more for these services in an environment where many consumers have already formed an opinion of 5G.