Telecom operators are increasingly relying on AI to boost margins as worldwide spending on telecommunication and pay TV services is projected to reach $1.53 trillion by 2025. This figure reflects a 1.7 per cent year-on-year increase, according to the International Data Corporation (IDC). The latest forecast marks a slight upward revision from earlier estimates, indicating a modest optimism in the market’s trajectory.
Kresimir Alic, research director of Worldwide Telecom Services at IDC, highlighted that the regional dynamics remain mixed, influenced by inflation, competition, and trends in Average Revenue per User (ARPU). Mobile services continue to lead the market, driven by the rising consumption of data and the growth of machine-to-machine (M2M) applications. These developments are crucial in compensating for declines in traditional voice and messaging revenue streams.
Fixed data services are also expected to see steady growth, fuelled by increasing demand for high-bandwidth connectivity. However, the spending on fixed voice services is set to decline further, as losses from legacy TDM voice services are not being offset by gains from IP-based voice solutions.
The pay TV sector faces challenges, with a slight contraction anticipated due to the surge in video-on-demand (VoD) and over-the-top (OTT) platforms. Despite this, these services remain integral to the bundled offerings provided by telecom companies worldwide.
IDC forecasts a 1.5 per cent compound annual growth rate for the global connectivity services market over the next five years, although the environment is expected to be less favourable than in previous years. Rising protectionism and economic uncertainty are shaping the global landscape, complicating the growth outlook for telecom operators.
Alic noted that while declining inflation may alleviate cost pressures, it could also diminish the inflation-driven boost to telecom spending that has been observed in recent cycles. Political instability in regions such as Eastern Europe and the Middle East adds another layer of complexity, while market saturation in advanced economies poses significant constraints on growth.
In the Asia Pacific region, the outlook has been modestly downgraded due to economic uncertainties in key markets like China, Japan, and Indonesia. In contrast, India is experiencing remarkable growth, with mobile ARPUs soaring and pushing the market towards double-digit expansion.
In the Americas, the northern market remains stable, with slight upward revisions noted in major Latin American markets. The EMEA region has seen marginal downward adjustments but is projected to outpace others, particularly in countries grappling with hyperinflation, such as Turkey, Egypt, and Nigeria.
In response to these evolving market conditions, telecom operators are focusing on improving margins and operational efficiency. AI technology is becoming increasingly strategic in this endeavour, with companies integrating it across various functions, including network operations, customer service, and fraud prevention.
AI initiatives are already yielding positive results, contributing to EBITDA margin gains through predictive maintenance and automated support systems. The technology enables telecom firms to offer personalised services and employ dynamic pricing strategies, enhancing ARPU and reducing customer churn.
Additionally, AI-driven fraud detection systems are minimising financial losses while strengthening customer trust and regulatory compliance. By accelerating the time-to-market for new services, AI is proving valuable in monetising emerging technologies such as 5G and edge computing.
As AI capabilities continue to advance, IDC anticipates that the technology will evolve from a mere operational tool to a strategic enabler of sustainable growth for telecommunications operators around the globe.
