As growth slows and average revenue per user continues to decline over the next five years, mobile operators will need to prioritize innovation in services, tariffs, business models, network operations, and partnerships to maintain and boost revenue, according to Ovum.
The analyst firm predicts that between 2012 and 2018, global connections will increase by a compound annual growth rate (CAGR) of less than 4 percent (from 6.5 billion to 8.1 billion), with global revenues to grow at less than half that rate (from $968 billion to US1.1 trillion).
However, 2018 will see a dip in global service revenues for the first time in the history of the mobile industry, slipping by 1 percent or $7.8 billion from 2017.
Market shift for mobile vendors
"When you compare connection and revenue CAGRs, it is clear that mobile operators are facing a new reality: they must do much more with much less," said Sara Kaufman, Ovum communications and broadband analyst. "Consolidation will help to alleviate some market pressures and is inevitable in many markets. But the need for revenue stabilization is becoming paramount for a sustainable future."
Kaufman claims operators in developed markets are under most pressure. Ovum's figures indicate that connections in Western Europe will grow by a compound annual growth rate of less than 1 percent, with revenues to decline at 1.48 percent.
"Several other developed markets" will see a year-on-year revenue decline in 2018, including the U.S., which will begin to show signs of its maturity," Kaufman added.
Ovum also said much of the revenue decline will be driven by a smaller average revenue per user, which will continue to decline across all markets by a 2.7 percent global CAGR between 2012 and 2018. The Middle East will experience the greatest decline, with revenue per user expected to fall by 2.5 percent.
Despite this, Kaufman said, "ARPU cannot fall indefinitely. In markets with very low ARPU, it will reach a floor and then stabilize."
This story, "Mobile device sales may slow, prompting deals, analysts say" was originally published by ARNnet.