Is the era of explosive data demand over for Australian networks?

The market has entered a period of sharp deceleration, with national data download growth falling from 40.1% in June 2020 to just 4.3% in December 2024. This collapse in growth indicates that the historical correlation between traffic volume and network expansion has fundamentally broken.

How are Australian operators performing against capital requirements?

The industry faces a critical profitability gap, with most players failing to reach the ACCC-estimated Weighted Average Cost of Capital (WACC) of 8.3%. Telstra is currently the only domestic operator meeting this benchmark, while competitors like Optus and TPG consistently underperform.

What is the financial impact of the current infrastructure investment cycle?

Returns on invested capital are under extreme pressure, evidenced by Singtel writing off 40% of Optus’s invested capital at the end of FY24. Without a shift in strategy, Australian operators risk mirroring European peers who saw average ROCE drop to 5% in 2018.

How are telcos evolving their business models to survive this downturn?

Operators are pivoting toward a utility-like model that prioritizes regulatory stability and AI-driven automation to protect margins. This shift is a direct response to a 357% increase in the market cap of top tech companies, which has successfully captured the value that telco infrastructure provides.

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State of the Australian Telecommunications Industry: Telco at a Crossroads

Industry ROIC fails to meet the 8.3% WACC as data growth slows to 4.3% and global platforms extract value.

David Kennedy · Venture Insights14 October 2025Period: FY2512 min read

4.3%↓

Total national data download growth (December 2024)

5%↓

Average ROCE for major European operators in 2018

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+1more stats

Companies covered:

Abstract

This is a speech delivered at CommsDay Wholesale Congress, Melbourne, 14 October 2025.

Key Takeaways

Australian data growth is slowing significantly, dropping from 40.1% in June 2020 to just 4.3% in December 2024.
A 'decoupled trend' exists where rapid data traffic expansion is not translating into revenue growth for network operators.
The industry faces a severe Return on Invested Capital (ROIC) problem, with most operators failing to meet the 8.3% WACC.

State of the Australian Telecommunications Industry: Telco at a Crossroads

Abstract

Key Takeaways

What's Inside