“Intensified” retail competition to drive wholesale telecom worth

Although the prices of many commodity wholesale services are falling, accelerating traffic volumes will ensure that wholesale revenues will continue to grow.

The world’s largest telecoms analyst firm, Ovum, expects wholesale revenues to grow across the globe, with Asia-Pacific experiencing the steepest rise due to intensified retail competition in many countries and escalating international traffic.

After analysing the financial results of more than 200 telecoms service providers, Ovum’s wholesale telecoms team has estimated that the global wholesale telecoms market will be worth US$142bn in 2019.

It will account for 6.6% of total telecoms service provider revenues, up from 5.5% in 2012. Ovum predicts that strong demand in the Asia-Pacific region will push its share of global total wholesale revenues to 26.0% in 2019, up from 17.0% in 2012.

The range of wholesale offers is growing rapidly in Malaysia and South Korea, and wholesale revenues will increase in China due to the recent licensing of 19 mobile virtual network operators (MVNOs).

These providers would not be able to operate without the wholesale services provided by China’s three dominant mobile network operators.

“The rapid rate of retail service innovation, the growth of voice and data traffic volumes, and the increasing complexity of retail services all depend on an efficient and effective wholesale market because few (if any) retail service providers can do everything themselves,” explains David James, practice leader for Ovum’s wholesale research channel and author of the report.

“New types of service provider are emerging, but their need for connectivity will stimulate greater demand for traditional wholesale services, while those telcos that do innovate at a retail service level will create demand from those that don’t.”

According to Ovum figures, wholesale revenues will be concentrated among a small number of large players.

In 2012 the five largest wholesalers earned more than a third of total global wholesale revenues, and the top 10 earned more than half of the total.

Telecoms service providers headquartered in North America and Europe dominated the list of the top 20 wholesalers in 2012, with only three based in Asia-Pacific, one in the Middle East and Africa region, and none from South and Central America.

However, James expects this picture to change with the rise of domestic and international wholesale in Asia-Pacific.

“We expect at least one Chinese carrier to be among the top 20 wholesalers by revenues in 2019, although North America and Europe will continue to dominate the list,” he adds.

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