The document discusses the challenges facing telecom companies in Europe, including a 15% decrease in telecom service revenue from 2008-2014. It notes that 5G networks present both opportunities and risks for telecom business models. New pricing models, services, and a shift away from ARPU metrics could drive growth. However, factors like regulation, market structure, and economic conditions will also impact success in the 5G era. The document concludes there is potential for a "renaissance" scenario with average annual growth of 3.2% if telecoms focus on productivity, fixed-mobile convergence, and real-time network management.

1. Rethinking the telcos
business models in the 5G era
IDATE Insight
Didier POUILLOT
Telecom Strategy Business Unit Director, IDATE
20 November 2014
The 5G era

2. 11. Huge pressure on telecom service markets… especially in Europe
• 2008-2014 = -15% decrease in telecom
service revenue in the EU-5
• Mobile services under tremendous
pressure since 2010
• Despite massive traffic growth
Margins severely hit
Restricted financial capacity
for investment
Telecom service revenue in EU-5, 2005-2014 (billion €)
200
100
0
45.9% 48.9% 50.6% 49.6%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
mobile fixed
Source: IDATE, Telecoms Markets & Players, Nov. 2014
Operators’ CapEx in mobile networks, total (billion €) and per capita (€)
EU-5
11.8
(38/inhab.)
+55%
+10%
Source: IDATE, Telcos CapEx, Oct. 2014
USA
25.4
(80/inhab.)
EU-5
13.1
(41/inhab.)
2008 2013
USA
16.4
(54/inhab.)

3. 3. Factors for success
-
Regulation:
net neutrality,
roaming...
Market structure:
consolidation,
FMC…
Anti-trust rules replacing
sector-specific regulation
Outlook for consolidation in Europe
Source: IDATE, Telco consolidation in Europe, March 2014
2
Economic climate: business profits,
purchasing power…
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4. 2. Any hope for growth?
• Traffic increase: new pricing
models (tiered pricing, data
sharing, sponsored data…)
• New services and applications:
M2M, video, verticals, business
solutions…
• ARPU no longer the right metric
Integration
Bundled
Devices
Traditional
telecom
ARPA?, ARPS?... Today Future
3
Source: IDATE
Vertical products
Marketplaces
OTT services
IT Convergence
(IaaS, integration, M2M)
Connectivity
services
(QoS, security, APIs)
New connectivity
(CE devices, M2M)
Bundled Devices
IP connectivity

5. IDATE thus concludes…
-Three major factors of change:
Productivity
Fixed mobile convergence
Real time network management
Comparison of the three scenarios in the EU-5, 2008-2025 (billion EUR)
% Average annual growth rate, 2013-2025
260
240
220
200
180
160
140
2008 '10 '12 '14 '16' '18 '20 '22 '24
"Evolution" scenario
"Doldrums" scenario
"Renaissance" scenario
CAGR 2013-2025
+3.2%
+1.1%
-1.2%
Source: IDATE, in Future Telecom, January 2014
Cost savings
Synergies
Value added/segmented offers