Sector trends & challenges
New revenue upside
Demand for remote working has provided a new revenue opportunity for high-speed home or mobile broadband. Enterprises are having to embrace partial working from home policies, placing greater reliance on network infrastructure.
Competition on price
Increased commoditisation has led to increased competition on price. The blurring between technology, media and telecommunications creates both opportunities and challenges to demonstrate consumer value.
Cash and investment
Requirements to invest in 5G and full-fibre networks will place pressures on operators. In addition, changes to network infrastructure will be needed to comply with new UK regulation, further adding to roll-out costs.
Sector rating profile
Formal restructuring activity in the Telecoms sector has been extremely rare over the long term given it is dominated by a very small number of large operators. Our work in the sector has traditionally been focused on operational restructuring and business improvement and we continue to see little signs of stress/distress indicators that would alter that.
The sector is dominated by a small number of large operators, covering a range of mobile to fixed line to satellite services. The sector has exhibited few signs of distress of late, given its importance in the post-COVID-19 economic recovery.
Commoditisation of traditional connectivity offerings, such as ADSL or FTTC broadband, has led to intense competition on price. Demand for new remote working tools may provide new revenue opportunities, such as high-speed home or mobile broadband. The move towards the Internet of Things (IoT) and Software as a Service (SaaS) will begin to drive substantial revenue, as all devices require reliable and consistent internet connections. All the while, revenue from traditional services such as voice calls and texts will decline further as savvy consumers move towards usage of cheap mobile data and Wi-Fi.
There are significant pressures to maintaining network reliability and improve coverage. The need to invest further in 5G and FTTP (or ‘full-fibre’) networks impose a need to focus on cash and liquidity. In addition, changes to telecommunication network infrastructure will be required to comply with new UK regulations, increasing 5G roll-out costs. Privacy and security concerns continue to be a focus for operators.
Streaming and alternative media are shifting customers away from traditional channels, forcing companies to seek new revenue streams from tangential offerings, such as their own content production. The blurring of lines between technology, media and telecommunications provides both opportunities and challenges for operators.
Find Your Expert
Mark Raddan is Interpath Lead for the Technology, Media and Telecommunications sector. Anthony Mayes leads our approach to Telecoms nationally for Interpath. For a full list of our senior people with experience in the sector use the button below.Our senior team