Deloitte is launching a report tomorrow looking at what will happen in the telecommunications sector over the course of the year: where will M&A activity be focused and will this mean for emerging markets, speed becomes over-rated, and GSM comes of age.
Tony Cooper, telecommunications partner at Deloitte, comments: “The outlook for the telecommunications sector in 2008 is varied. This year’s Predictions cover the impact of a possible economic downturn on the sector; the growing viability of a machine-to-machine market, catalyzed by the imminent arrival of the $10 mobile phone; the rise of the emerging market global mobile titan; the outlook for GSM as it reaches 21 years of age; and the uncertain relationship between bandwidth and revenues in the broadband market.
Prey becomes predator
“While the credit crunch may dampen the overall pace of mergers and acquisitions activity in 2008, the will to grow via acquisitions is likely to remain strong in the telecommunications sector. However while established, developed-world mobile operators may be looking for acquisitions, in 2008, the tables may be turned. The leading operators in emerging markets may transform themselves from prey to predator, with the cash generated from hundreds of millions of new subscribers providing a potent war chest, unconstrained by the higher interest rates that have followed the credit crunch.
Questioning the need for speed
“The debate over how fast is fast enough in the telecommunications is likely to as vigorous in 2008 as in earlier years. But concerns over the cost of financing will cause telecommunications companies and their shareholders to question far more aggressively the business case for speed. Telecommunications companies should be careful not to prioritise the quest for attaining the limits of what is technically possible over the unrelenting need for profitability.
Giving mobile GPS direction
“In 2008 prices for GPS chipsets will fall to just a few dollars and the number of devices that incorporate the technology is expected to grow rapidly. In 2008 the mobile industry will overlook several critical differences between how satellite navigation is used in vehicles and how it might be used by people on foot. Thus while a growing number of GPS-enabled mobile phones may be shipped and sold in 2008, aside from the initial novelty, their use may be infrequent. Which may mean just additional costs, but with disappointing added value.
Exploiting new media’s growing need to communicate
“In 2008 digital communications will become more voluminous, varied, vibrant and vital to the way we live than ever before. New media companies (such as social networks, synthetic worlds and blogs) are likely to offer services via which a large volume of traditional and newer forms of communication is initiated. All of these trends may reassure the telecommunications industry that demand for communications is more vibrant than ever. Demand for new media might however also highlight the telecommunications sector’s inability to monetise more of this demand.
GSM comes of age
“GSM does appear, for its first 21 years, to be a resounding success story. On 7 September 2008, GSM comes of age: over 700 GSM networks in more than 200 countries are expected to carry over 16 billion minutes of calls and 6 billion text messages.. But in the year it comes of age, GSM’s outlook is expected to remain as challenging as ever. In 2008 GSM mobile operators should evolve new strategies for every aspect of their business. GSM may have been a gifted child, but as an adult, it is likely to have to mature quickly, develop new relationships and skills, and work like never before to stay on top.”