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What Five Trends Mean for Telcos
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What Five Trends Mean for Telcos

Val Elbert, Franck Luisada, Scott Stemberger, Davids Tjhin, Chi Hung Chong and Olga Smurygina
Boston Consulting Group, 2022
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Recommendation

From 2019 to 2022, telcos had a total shareholder return (TSR) of 9%, performing a percentage point below the equities market as a whole. Between 2019 and 2022, pure-play telecom infrastructure companies actually outperformed the market by six points, but regional and global service providers brought the overall TSR down. How can the industry as a whole get back into the double digits? This report from the Boston Consulting Group offers some ideas.

Summary

Telecommunications companies are currently experiencing surprisingly low returns, and will require a change in strategy if they hope to perform well in the future.

Consider every trend coming over the horizon – AI, virtual reality, blockchain, cloud-based applications, and Web3 – and you’ll have to recognize that the telecom industry could play a strong role in nearly all of them. But each telco’s future will depend on how they handle five upcoming trends, namely: structural separation; B2B 5G applications; competitive hyperscalers; Web3; and generation Z’s rise.

Telcos can’t assume that they’ll get their allotment of the Web3 market, because start-ups, established tech firms, and every other type of company, from health care to auto, will be elbowing their way into the space. To preempt these challengers, Telcos will have to develop novel applications, keeping in mind that as their future customers, gen Z expects a high-quality digital experience. If telcos sleep on innovation, some other company will be the one to deliver.

Structural separation, B2B applications and competitive hyperscalers are all...

About the Authors

Val Elbert, Franck Luisada, Scott Stemberger, Davids Tjhin, Chi Hung Chong and Olga Smurygina are professionals with the Boston Consulting Group.

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