Worldwide telecom market revenue to grow 7.6% in 2008

The worldwide telecommunications market is on pace to reach $2 trillion in 2008, a 7.6% increase from 2007 revenue of $1.8 trillion, according to research firm, Gartner. However, Gartner added the industry does face challenges as growth in the fixed voice sector and in the most developed countries has slowed or even begun to shrink.

Will Hahn, principal research analyst at Gartner, commented: “Revenue from telecom services has traditionally dominated the market, accounting for four out of every five dollars earned in the sector. We forecast that this historic proportion will now shrink, an indication that legacy revenue is no longer sufficient for carriers to justify their investments and that the growing equipment sector is being deployed to support new and converged services, as well.”

Revenue in the telecom service segment is expected to reach $1.6 trillion in 2008 and account for 81% of overall telecom revenue. In 2007, total telecom service revenue was $1.49 trillion, four times higher than total telecom equipment revenue at $353 billion. Gartner forecasts that by 2012, the service segment will have a CAGR of 4.4%, compared with 8.7% for the equipment segment. As a result, the relative proportions of the two segments will finally begin to move downward, closer to three to one.

Gartner predicts that by 2012, the ratio of mobile to fixed connections will exceed four to one. “We now forecast that revenue in the mobile sector will top $1 trillion by 2010,” said Hahn. “Our breakdown of services clearly shows that fixed voice is in decline, but mobile voice, though currently growing, will also stagnate as a proportion of the market by 2012. The baton has clearly been passed to data services in the legacy sector.”

From a regional perspective, North America has been the largest telecommunications market, but Asia-Pacific is forecast to surpass North America in telecom revenue in 2008. North American telecom revenue is forecast to total $511.6 billion in 2008, a 4.5% increase from 2007. The telecom market in Asia-Pacific is projected to reach $513.1 billion in 2008, up 8% from 2007. Meanwhile, the Middle East and Africa will be the fastest growing region with a CAGR of 8.6% between 2007 and 2012.

Hahn continued: “Traditional telecom service providers and equipment manufacturers are seeing convergent trends eroding their margins while rising Asian players and other entrants eat away at their share within the total market. Telecom service providers and equipment manufacturers alike must prepare growth plans that transform their offerings and their organisations. Growth in legacy markets is ebbing fast, and the only way to maintain it will be via the scope to offer converged solutions, to provide service in non-traditional sectors and to enter and win in emerging markets whose profile is very different from more mature regions.”

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