The Telecoms World According to Deloitte

David Murphy

Each year, the Technology, Media and Telecommunications (TMT) practice at Deloitte announces its predictions for the telecommunications sector. The 2008 series of predictions has drawn on internal and external inputs from conversations with member firm clients, contributions from Deloitte member firms 6,000 partners and managers specializing in TMT, and discussions with industry analysts as well as interviews with leading executives from around the world. Here, Deloitte Telecommunications Partner Tony Cooper summarises this years predictions. 

The outlook for the telecommunications sector in 2008 is varied.
This years predictions cover the impact of a possible economic
downturn on the sector; the growing viability of a machine-to-machine
market, catalyzed by the imminent arrival of the $10 (5) mobile phone;
the rise of the emerging market global mobile titan; the outlook for
GSM as it reaches 21 years of age; and the uncertain relationship
between bandwidth and revenues in the broadband market.

Prey becomes predator
While the credit crunch may dampen
the overall pace of mergers and acquisitions activity in 2008, the will
to grow via acquisitions is likely to remain strong in the
telecommunications sector. However, while established, developed-world
mobile operators may be looking for acquisitions, in 2008, the tables
may be turned. The leading operators in emerging markets may transform
themselves from prey to predator, with the cash generated from hundreds
of millions of new subscribers providing a potent war chest,
unconstrained by the higher interest rates that have followed the
credit crunch.

Questioning the need for speed
The debate over how fast is
fast enough in the telecommunications is likely to be as vigorous in
2008 as in earlier years. But concerns over the cost of financing will
cause telecommunications companies and their shareholders to question
far more aggressively the business case for speed. Telecommunications
companies should be careful not to prioritise the quest for attaining
the limits of what is technically possible over the unrelenting need
for profitability.

Giving mobile GPS direction
In 2008, prices for GPS
chipsets will fall to just a few dollars and the number of devices that
incorporate the technology is expected to grow rapidly. The mobile
industry will overlook several critical differences between how
satellite navigation is used in vehicles and how it might be used by
people on foot. Thus, while a growing number of GPS-enabled mobile
phones may be shipped and sold in 2008, aside from the initial novelty,
their use may be infrequent. Which may mean just additional costs, but
with disappointing added value.

Exploiting new medias growing need to communicate
2008, digital communications will become more voluminous, varied,
vibrant and vital to the way we live than ever before. New media
companies (such as social networks, synthetic worlds and blogs) are
likely to offer services via which a large volume of traditional and
newer forms of communication is initiated. All of these trends may
reassure the telecommunications industry that demand for communications
is more vibrant than ever. Demand for new media might however also
highlight the telecommunications sectors inability to monetise more of
this demand.

GSM comes of age
GSM does appear, for its first 21 years,
to be a resounding success story. On 7 September 2008, GSM comes of
age: over 700 GSM networks in more than 200 countries are expected to
carry over 16 billion minutes of calls and 6 billion text messages. But
in the year it comes of age, GSMs outlook is expected to remain as
challenging as ever. In 2008, GSM mobile operators should evolve new
strategies for every aspect of their business. GSM may have been a
gifted child, but as an adult, it is likely to have to mature quickly,
develop new relationships and skills, and work like never before to
stay on top.

To see the report in full, click here.