Telco 2020 – How Telcos transform for the ... - Roland Berger

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Telco 2020 – How Telcos transform for the "Smartphone Society"
Current market figures and expectations for Europe suggest that two issues are key with
regard to telcos' future strategic orientation:
1. Access will remain the backbone of most telcos' business.
2. To be equipped for growth markets, many telcos will also offer Access Plus services,
covering everything from the marketing of access-centric platforms to mostly
regional OTT services.
Access will remain the major source of revenue and hence the core of every telco strategy in
the long run. In 2015, we expect to see revenue totaling some EUR 300 billion in Europe.
Around two-thirds of this amount will be attributable to mobile communication, partly because
LTE networks will have substituted as much as 10-20% of landline Internet connections.
Due to their experience with infrastructure, their heavy investment in more efficient
broadband access networks and the savings permitted by leaner business models, telcos can
continue to generate EBITDA margins of as much as 35% to 45% by delivering access alone.
Having said that, this core business area will stagnate until 2015. Given the upheaval on the
communications market, we expect to see a decline of 1% to 2% a year until 2020. Activities
such as hosting, data storage and security services – all of which build on access – are the
exception to the rule. These cloud technologies are enjoying double-digit growth. They are
attractive to telcos because they upgrade "mere" access, allow to capitalize on their networks,
help to retain customers, their data and their applications, and so allow companies
to gain a foothold in the OTT segment.