As growth slows and average revenue per user (ARPU) continues to decline over the next five years, mobile operators will need to prioritise innovation in services, tariffs, business models, network operations, and partnerships as revenue-generating strategies, 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 four per cent (from 6.5 billion to 8.1bn), with global revenues to grow at less than half that rate (from $US968bn 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 one per cent or $US7.8bn from 2017.
"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," Ovum communications and broadband analyst, Sara Kaufman, said.
"Consolidation will help to alleviate some market pressures and is inevitable in many markets. But the need for revenue stabilisation is becoming paramount for a sustainable future."
Kaufman claims operators in developed markets are under most pressure. Ovum figures indicate connections in Western Europe will grow by a CAGR of less than one per cent, with revenues to decline at a CAGR of 1.48 per cent. "Several other developed markets" will see a year-on-year (YoY) revenue decline in 2018, including the US which will begin to show signs of its maturity.
Ovum also said much of the revenue decline will be driven by falling ARPU, which will continue to decline across all markets by a 2.7 per cent global CAGR between 2012 and 2018. The Middle East will experience the greatest decline with ARPU set to fall by a 2.5 per cent CAGR.
Despite this, Kaufman said, "ARPU cannot fall indefinitely. In markets with very low ARPU, it will reach a floor and then stabilise."