Operators face challenges in 2019 – how can you grow revenue?

The facts are clear – operators from many markets have experienced long-term revenue decline and have failed to capitalise on new sources of revenue. Faced with the challenge of 5G, many are hoping that new investments will reverse this trend. But, 5G offers uncertain business models. What can you do in 2019 to grow revenue?

As we move into 2019, it’s appropriate to examine some of the key challenges faced by operators, particularly in established markets. Much of the headlines this year will be captured by new investments in 5G and the race to launch consumer services, but these headlines cannot change some basic facts. Fixed and mobile operators have experienced several years of ongoing revenue decline and increasing margin pressure.

Take data from UK regulator Ofcom, for example[1].

Operator revenue and mobile subscriptions, 2012 - 2017

Figure 1 – Operator revenue and mobile subscriptions, 2012 - 2017

This shows a consistent decline in both retail and wholesale revenue from fixed and mobile operators, during the period 2012 to 2017. At the same time, the number of fixed lines has remained broadly constant, while the number of mobile subscribers has grown. Clearly, operators and service providers are making less money from more customers.

2019 is set to be a key year, as operators not only have to struggle with declining revenue and increasing costs, they are also faced with the challenge of having to make significant investments in new technologies (5G) with uncertain rewards. Worse, efforts to grow revenue from third parties through wholesale relationships have largely failed to deliver.

It’s time to step back. Operators have to focus on fundamentals to find new sources of revenues. While investments in 5G are inevitable, operators also need to explore markets in which they already have a foothold. That means turning to existing customers to whom they can sell more services. Voice may be in decline in terms of pure revenue, but the figures also show that the number of outbound mobile minutes used per subscriber has actually grown. Operators need to leverage this and to offer more than simply minutes to their users.

Mobile voice minutes, 2012 - 2017

Figure 2 – Mobile voice minutes, 2012 - 2017

One way to achieve this is to increase the value of what they offer to business customers. Today’s business users want more than pure mobile minutes and connectivity. They need solutions that help them coordinate, manage and grow their businesses. Continuing to focus on simple connectivity bundles will not help operators grow and it will not help them offset the ongoing revenue decline they face.

So, it’s time to face up to reality. 5G may generate new revenue, but even if it does, it’s not going to emerge for some time. It’s a long-term bet. Instead of waiting, operators need to take immediate action to address the long-term decline in revenue they have experienced. In 2019, why not start by looking at more effective ways to generate revenue from business customers? Get 2019 off to a productive start by talking to Gintel. We can show you how to generate revenue from business customers, across all segments and company sizes. Get in touch to find out more.

 

[1] Ofcom “Communications Market Report”, August 2018

Mobile Operator Revenue Growth, 5G, Ofcom

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