Ovum Predicts Telco IT Spending to Reach US $60bn in 2017

London, UK,  September 25,  2013 –The global telecoms industry’s revenues will remain roughly flat over the next few years, with a decline in spending on voice services counterbalanced by growth in spending on mobile and fixed (broadband) data services, according to global analyst firm Ovum.

In a recent market forecast analysis report*, it was found that as growth slows, market realities mean telcos must find ways to serve their existing customers profitability rather than simply growing their customer bases.

Shagun Bali, analyst for Telecoms Technology at Ovum and author of the report said, “Over the next five years, service and tariff innovation will be key revenue-generating strategies, while LTE rollout, network optimization, and creative approaches to partnerships will become focal points for cost savings. Telcos need to monetize new business models, leverage customer data by investing in analytics, and define their response to over-the-top (OTT) players.”

Ovum estimates that telco IT spending will reach US$60bn in 2017, growing at a CAGR of 0.6 percent between 2013 and 2017. Growth in telco IT spending will be driven primarily by investments in packaged software and system integration. Spending in emerging markets in Asia-Pacific, the Middle East and Africa (MEA), and South and Central America (SCA) will drive global IT spending. In North America, telco IT spending will grow modestly at a CAGR of 0.8 percent to reach US$17.5bn by 2017.

Bali states that, “Although overall telco IT spending will grow modestly, the trend is for telcos to reduce internal IT spending and increase spending on external IT projects. To control costs, telcos are outsourcing the maintenance of legacy IT and turning to trusted partners, both to implement unified and standards-based systems and software and to provide skills such as those of data scientists for Big Data analytics projects. Consequently, the overall addressable market for vendors will increase.”

“The combination of middling profits, high capital requirements, high risk, and uncertain economic growth requires telcos to place their bets carefully, including investing in growing revenue streams and managing customer experience more than ever before. The result is increased opportunities for the IT industry. In the long term, telcos will place more focus than they have before on software to drive innovation,” concludes Bali.