Five-year Outlook for Telco Market 2024

Declining real ARPUs and rising competition from hyperscalers force a strategic shift toward infrastructure separation.

David Kennedy · Venture Insights25 September 2024Period: FY24-FY2812 min read

0.9%↓

Australian Forecast GDP growth (Jun 2024)

2011→

Year global CSP revenues began long-term decline

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Abstract

This report reviews the technology and market trends shaping the telco industry in Australia and New Zealand over a five-year horizon. It identifies a critical revenue gap as 5G consumer growth remains limited, forcing operators to pivot toward enterprise use cases and structural separation. With real ARPUs in long-term decline and interest rates lifting the weighted average cost of capital, the industry faces intense pressure to improve return on invested capital through aggressive efficiency programs and infrastructure divestment.

Key Takeaways

The ANZ telco market will remain relatively flat in revenue terms over the next five years as price deflation offsets volume growth.
Return on Invested Capital (ROIC) remains below the cost of capital for most operators, with only Telstra and Spark meeting efficiency benchmarks.
5G monetization is lagging in the consumer segment, shifting industry focus toward nascent enterprise use cases and edge computing.

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Frequently Asked Questions

The ANZ telco market will remain revenue-flat over the next five years as volume growth is neutralized by a price index that has declined 25% since 2012. Operators must navigate this stagnation while facing a low-growth macro environment, with Australian GDP growth forecast at just 0.9% for June 2024.

Consumer 5G monetization is currently lagging, forcing a strategic pivot toward enterprise use cases and edge computing to bridge the revenue gap. Most regional operators are failing to generate a Return on Invested Capital (ROIC) above their cost of capital, with Telstra and Spark being the only notable exceptions meeting efficiency benchmarks.

Telcos are accelerating structural separation by divesting tower and fibre assets to attract private capital and improve balance sheet health. Aggressive automation and efficiency programs are now essential to maintain EBITDA margins as rising interest rates increase the weighted average cost of capital.

LEO satellites and 5G fixed wireless have transitioned from niche products to viable competitors in urban broadband markets. Simultaneously, hyperscalers are capturing the majority of high-margin ICT growth, leaving traditional carriers with lower-margin carriage services.

Abstract

Key Takeaways

Frequently Asked Questions

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