Telecommunications industry

The telecommunications industries within the sector of information and communication technology is made up of all telecommunications/telephone companies and internet service providers and plays the crucial role in the evolution of mobile communications and the information society.

Traditional telephone calls continue to be the industry's biggest revenue generator, but thanks to advances in network technology, telecom today is less about voice and increasingly about text (messaging, email) and images (e.g. video streaming). High-speed internet access for computer-based data applications such as broadband information services and interactive entertainment, is pervasive. Digital subscriber line (DSL) is the main broadband telecom technology. The fastest growth comes from (value-added) services delivered over mobile networks.[1]

The telecom sector continues to be at the epicenter for growth, innovation, and disruption for virtually any industry. Mobile devices and related broadband connectivity continue to be more and more embedded in the fabric of society today and they are key in driving the momentum around some key trends such as video streaming, Internet of Things (IoT), and mobile payments.

— Deloitte[2]

Think of telecommunications as the world's biggest machine. Strung together by complex networks, telephones, mobile phones and internet-linked PCs, the global system touches nearly all of us. It allows us to speak, share thoughts and do business with nearly anyone, regardless of where in the world they might be. Telecom operating companies make all this happen.

— Investopedia[1]

Insight Research[3] projected that telecommunications services revenue worldwide would grow from $2.2 trillion in 2015 to $2.4 trillion in 2019.[4]

Market segmentation

Of all the customer markets, residential and small business markets are the toughest. With hundreds of players in the market, competitors rely heavily on price; success rests largely on brand name strength and investment in efficient billing systems. The corporate market remains the industry's favorite. Big corporate customers are concerned mostly about the quality and reliability of their telephone calls and data delivery while being less price-sensitive than residential customers. Multinationals, spend heavily on telecom infrastructure and premium services like high-security private networks and videoconferencing. Network connectivity can also be provided to other telecom companies by wholesaling circuits to heavy network users like internet service providers and large corporations. [1]

Value chain
2018 share of revenues by segment[5]
segment % share of revenues
Infrastructure and platform vendors5
Device vendors20
Operators55
Over-the-top content (OTT), content, advertising services10
Retail and distribution10

Global players
Top global telecom companies in 2013 [6]
Company Country Market value ($ Bn) Revenue Profit
China MobileChina213.888.820.5
AT&TUSA200.1127.37.3
Verizon CommunicationsUSA137.3115.70.9
VodafoneUK135.774.411.1
América MóvilMexico70.760.27.1
TelefónicaSpain67.182.35.2
TelstraAustralia58.425.83.5
Nippon Telegraph & TelJapan58.21275.6
Deutsche TelekomGermany48.876.7-7
SoftbankJapan47.238.783.8

Mergers and Acquisitions

Around 24,800 M&A deals have been conducted in the Telecommunication Industry with either the acquirer or the target company coming from the Telecommunications sector. In total over 5.712 bil. USD have been spent on M&A between 1985 and 2018 in this industry.[7] There has only been one big M&A wave around 1999 and 2000. In most other industry there are three waves between 1990 and 2018. Since 1999 deal value shrunk by -90.12% and is expected to stagnate in 2018.

Here is a list of the top 10 Telecommunication deals in history ranked by volume:

Date Announced Acquiror Name Acquiror Mid Industry Acquiror Nation Target Name Target Mid Industry Target Nation Value of Transaction ($mil)
11/14/1999 Vodafone AirTouch PLC Wireless United Kingdom Mannesmann AG Wireless Germany 202,785.13
09/02/2013 Verizon Communications Inc Telecommunications Services United States Verizon Wireless Inc Wireless United States 130,298.32
03/05/2006 AT&T Inc Wireless United States BellSouth Corp Telecommunications Services United States 72,671.00
05/11/1998 SBC Communications Inc Telecommunications Services United States Ameritech Corp Telecommunications Services United States 62,592.54
01/15/1999 Vodafone Group PLC Wireless United Kingdom AirTouch Communications Inc Telecommunications Services United States 60,286.87
01/26/2000 Shareholders Other Financials Canada Nortel Networks Corp Telecommunications Equipment Canada 59,973.57
06/14/1999 Qwest Commun Intl Inc Telecommunications Services United States US WEST Inc Other Telecom United States 56,307.03
06/24/1998 AT&T Corp Telecommunications Services United States Tele-Communications Inc Cable United States 53,592.49
07/28/1998 Bell Atlantic Corp Telecommunications Services United States GTE Corp Telecommunications Services United States 53,414.58
04/22/1999 AT&T Corp Telecommunications Services United States MediaOne Group Inc Cable United States 49,278.87

Recent developments

The telecommunications sector has seen a large increase in the recent years. Whereas in 2015 there were 3.3 billion active mobile broadband subscriptions worldwide, in 2020 there were around 7.7 billion. This increase was due, in part at least, to the deployment of 4G LTE.[8]

During the COVID-19 pandemic, telecommunications supported the fight against the virus and the resilience of economy by various developments, inclduing supporting the developments of heat maps showing the expansion of the virus as well as supporting digital communications for an increased numbers of persons working from home.[9]

Societies

See also

References
  1. "The Industry Handbook: The Telecommunications Industry". 7 January 2004.
  2. "2017 Telecommunications Industry Outlook - Deloitte US". Deloitte United States.
  3. "Insight Research - Telecom Market Research Reports, Industry Analysis, Custom Consulting Services". www.insight-corp.com.
  4. "Worldwide Telecommunications Industry Revenue to hit $2.4 Trillion in 2020, says Insight Research".
  5. "Global telecommunications study: navigating the road to 2020" (PDF). EY.
  6. "Top 10 Telecom Companies of the World 2013".
  7. "M&A by Industries - Institute for Mergers, Acquisitions and Alliances (IMAA)". Institute for Mergers, Acquisitions and Alliances (IMAA). Retrieved 2018-02-28.
  8. "Global Telecom Industry Statistics 2020 – CAPEX, Mobile Revenue, Infrastructure Market Share and Regional Subscription Data – ResearchAndMarkets.com". businesswire.com. Retrieved 2021-02-05.
  9. "The telecom sector in 2020 and beyond". www.mckinsey.com. Retrieved 2021-02-05.
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