Increased competition/new competitors
The on-going consolidation of telecoms markets around the world is part of a battle for market shares. It has led to intense competition on price and added pressure to quickly integrate new technology and offerings to stay ahead of competitors.
As a result, 75.9% of telecoms see increased competition/new competitors as a risk. The BDO 2018 Telecom Risk Factor Survey also shows that around half of telecoms see related areas like technology substitution (44.4%) and changes to industry structure (42%) as risks.
Many markets are saturated, and there is little to no untapped customer base left to target, leaving telecoms battling for the same customers. The focus becomes differentiating through services and lower prices than competitors. The competition is by no means reserved for inside the telecoms space, as technology companies continue to pressure telecoms. Over-the-top (OTT) services have already taken solid bites out of the market for private consumers and are increasingly turning their attention to the business segments with new offerings.
While landline services struggle, telecoms see continued growth in data. Analysis from Statista predicts average data usage per smartphone to double between 2018 and 2021. There can be little doubt that digital is – and will continue to be - the battleground. It is an arena where newcomers have already proven that they are quick and nimble, and easily adapt to - and take advantage of - new technologies. Telecoms must demonstrate the same ability if they hope to mitigate the risks associated with increased competition and new competitors. Perhaps this is one of the main reasons that 53.7% of telecoms see operational infrastructure as a risk in our 2018 survey.
This seems to be particularly true in the Americas where all telecoms surveyed view increased competition/new competitors as a risk. An added factor in US market is increased pressure from multi-service cable operators (MSOs), like Comcast. For the EMEA region, 65.5% of telecoms identify new competitors and increased competition. The same number for telecoms in the Asia-Pacific is 66.7%
“The future earning potential of telecom companies is intrinsically tied to how well they adapt and integrate new services in their portfolio. Finding ways to scale both new and existing offerings is very much the order of the day. That is why bundling of services remains a priority for many telecoms. All indications that the competition for market shares is far from over. In many markets, competition is leading to large-scale mergers. Often of companies inside the telecoms industry and big corporations in related verticals. The communications + content approach seems especially popular.”
Tom Mannion, Managing Director, BDO USA