Telecoms

Investment requirements in new technology and infrastructure are high – and rising – but the sector has become increasingly low margin in recent years.

Mobile is being squeezed by declining consumer revenues – a product of intense competition across MVNO and traditional operators – and increased investment in 5G connectivity. The latter is increasingly relevant, with 5G requiring a greater number of masts to provide the capacity speed and latency necessary to support services such as autonomous vehicles. Similarly, as the cost-of-living crisis impacts on household incomes, we're likely to see consumers delaying mobile phone upgrades, impacting an important revenue stream for most operators.

In fixed line, there is little short of a revolution underway. The previous infrastructure duopoly is being supplanted by a host of private equity-backed upstarts, investing rapidly in fibre-to-the-premises (FTTP) connections. Many of these operators are heavily lossmaking as they race to lay cable across the business. There is likely to be medium-term consolidation to build efficiencies.