European Communications has picked out six predictions for the year ahead, featuring content, new business areas and M&A megadeals.

A new front opens on the content wars

Arguably the most worrying prediction for telcos comes from Juniper Research, which thinks the likes of Amazon and Facebook will enter the sports rights fray this year.

In their view, this will include bidding on major sports tournaments such as the English Premier League.

The big winner could be Amazon, which wants to enrich its Prime offering to tempt new customers.

The sporting rights field is a lucrative and hard-fought market, with BT paying €1.2 billion for three seasons of European football back in March 2017.

Freeing up data

Zero rating began to gain traction in 2017, with the likes of Deutsche Telekom introducing a service called Stream On and Three UK launching its Go Binge tariff.

Martin Morgan, VP of Corporate Marketing at Openet, says operators see zero rating as a good way to drive subscribers to access content on their devices by catering to customer concerns about running out of credit.

“Service providers want people paying for content (via higher priced bundles, or as an add on),” says Morgan. “They don’t want customers having to worry about bill shock.”

Morgan says the above combined with clarification of net neutrality rules in Europe will hasten a “slide” in 2018 towards more data services becoming free to use.

M&A “megadeals” to continue

There was plenty of M&A activity in 2017 and BICS Chief Executive Daniel Kurgan thinks 2018 will be no different.

“M&A megadeals will continue into 2018, with the IoT in particular driving telco interest in companies in a variety of vertical sectors,” says Kurgan.

The CEO thinks many of these deals will focus on chipset and semiconductor manufacturers, as well as between the telecoms and automotive industries.

“Connected cars will rely on ultra-low latency, high reliability connectivity; something telcos are able to provide and manage, with potentially huge returns,” Kurgan says.

Meanwhile, the CEO predicts smaller players will look for acquisition opportunities to “enhance offerings, expand assets and stay relevant in the digital economy.”

Tentative moves into new business areas

The launch of Orange Bank in November was something of a flagship for another major trend: operators’ moves into new areas of business.

“Telcos are definitely on the lookout for new revenue sources and innovations, moving into different areas,” Kester Mann, Principal Analyst at CCS Insight, tells European Communications.

“Operators will continue to look for differential revenue, given the decline in voice and SMS as the core revenue driver.”

However, Mann expects 2018 forays to be “tentative” and doesn’t expect any bold moves on the scale of Orange Bank.

He is also cautious about the bank’s prospects in the year ahead.

“[Orange] deserves some credit for seeking to move out of the traditional areas they’ve been in for a long time and trying to disrupt new areas,” says Mann.

However, while he says banking is a logical extension of some of the operator’s other activities, the banking sector has “notoriously low churn” and it is not obvious where the revenue streams will come from.

Securing a place in the enterprise market

Telcos are expected to expand their existing offerings in key areas such as enterprise IT.

Tom Rebbeck, Research Director for Enterprise and IoT at Analysys Mason, tells European Communications that security will be a major area of interest in 2018.

He cites the investments in building security capabilities made by Deutsche Telekom and Vodafone in 2017.

“It is an obvious cross-sell to bundle security with connectivity,” Rebbeck says.

However, he notes there is still work to be done by operators to position themselves as a security provider.

For example, he cites figures from Analysys Mason saying that while two-thirds of companies have some security solution in place, less than a quarter of these buy from their operator.

The IoT will become increasingly crucial to support business processes

In 2018, we will see the IoT become further ingrained in the core systems and the initiatives of the world’s biggest businesses, says Erik Brenneis, CEO, Vodafone Global Enterprise.

By 2022, the CEO predicts the IoT will have grown to have an essential role in millions of business processes.

Before long, says Brenneis, the ability to remotely control and monitor vehicles and remote healthcare devices and appliances, for example, will be a relatively normal process thanks to IoT connectivity.


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