Telecoms industry faces challenging conditions in 2023

Analysys Mason, a world-leading management consultancy focused on telecoms, media and technology (TMT), has warned of the challenges facing the telecoms industry in the year ahead. Like many other industries, the biggest issue it faces in 2023 is how it copes with the impact of inflation, particularly rising energy costs, and the reaction to any price rises that are passed on to customers. This is set against a backdrop of existing market challenges that are already testing the industry’s ability to deliver services, open up new revenue streams and return value to shareholders.

The industry is experiencing a mix of declining revenue and increasing investment costs. It has underperformed compared to the market index over the past decade, reporting a low return in 2021 (7 percentage points below the European market, and a similar performance against the markets in North America and Asia), and it has some of the highest capital expenditure thanks to network and infrastructure investments, particularly relating to deploying 5G, the further evolution of 5G architecture and the prospect of 6G.

“After a decade of low inflation and low interest rates, the telecoms sector faces the uncertainty of how it will be affected by these cost increases and the degree to which it can increase its own prices in response,” said Larry Goldman, Chief Analyst at Analysys Mason. “Combined with high investment costs and questions about potential returns, the market outlook is challenging as the telecoms industry tries to steer its path through price rises, rolling out network availability and launching new services.”

CT Bureau