Wholesale Revenue Growth
Omdia recently completed its Global Wholesale Market Forecast 2019-25 which tracks wholesale revenue trends for backbone, voice, and mobile services in four regions: Americas, Asia and Oceania, Europe, and Middle East & Africa. The total revenue available to wholesalers for telecoms services was around US$200 billion in 2018. Factoring in the impact of the COVID-19 pandemic, global wholesale revenue across all service areas is forecast to increase to US$267 billion by 2025, a compound annual growth rate (CAGR) of 4.4%. The figure below shows expected growth rates from 2019-2025 by geographic region.
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Internet traffic growth in the Americas and Asia and Oceania are leading overall global wholesale revenue growth. As international connectivity options increase, non-US providers are gradually sending less global traffic to transit the US. Globally, the Middle East and Africa (MEA) is the fastest growing region, albeit from a smaller starting point than more developed regions.
Asia and Oceania
The international wholesale backbone market in the Asia and Oceania region (which includes central and southern Asia) is expected to grow from US$12.1 billion in 2019 to $21.7 billion in 2025. Japan is the single largest market for international backbone services outside the US, due to very high domestic broadband penetration and a high number of international links and is expected to have around 25% of segment revenue in the region by 2025. Revenue growth for this segment in China is expected to be strong due to broadband penetration as the desire for international content grows.
National Backbone Growth Depends on Speed of Broadband Rollouts
As with international backbone services, national backbone services are also growing steadily, albeit at a lower CAGR of 5.3%. This segment is expected to increase from US$42.7 billion in 2019 to US$58.2 billion in 2025. Wholesale is a small part of the national backbone markets because many CSPs prefer to sell directly and build their own infrastructure. However, more complex retail services such as 5G and IoT are increasingly dependent on the wholesale market and are expected to spur further growth in this segment.
Regional differences reflect a variety of levels of demand driven by retail broadband penetration and demands from consumers and enterprises for data-based services, including VoIP. In addition, providers in some markets are moving towards higher value managed services, while others favor simpler wholesale services such as dark fiber.
Asia and Oceania
In Asia and Oceania, wholesale national backbone revenue growth is expected to increase from US$10.4billion in 2019 to US$13.4 billion in 2025
National Last Mile
Omdia’s forecast of national last mile services comprises revenues earned by wholesalers for fixed last-mile broadband connections and carriage. This includes fixed and wireless point-to-point access such as xDSL, fiber, cable leased lines, fixed wireless access (FWA), and satellite. Globally, wholesale national last mile revenues are expected to increase from US$65.9 billion in 2019 to US$88.2 billion in 2025, a CAGR of 5%. Wholesalers are expected to take a larger share of total last mile revenues in markets where broadband penetration is higher, while wholesale growth will be lowest in mature markets where pricing pressure offsets increased connections. Wholesale growth rates are highest where current broadband penetration is comparatively low, such as South Africa, Nigeria, Mexico, and Brazil.
Broadband last mile services are well established in North America, Europe, and some Asia markets. There are regional differences based on different levels of last mile availability and of regulatory intervention to increase broadband roll-out and retail competition. Wholesale last mile services are generally less available in markets where governments retain ownership stakes in incumbent service providers, and where the cost of deployment exceeds return on investment.
Voice Services Continue their Decline
Large Wholesalers are Consolidating Carriage of International Voice Minutes
International voice revenues continue to fall faster than any other service grouping: global wholesale international voice revenues declined from US$12.7 billion in 2019 to US$7.4 billion in 2025, a CAGR of -8.6%. This segment is in terminal decline due competing IP-based communication services including VoIP and messaging, but the decline will be slow as usage gradually falls away. The drop-off is sharpest in developed markets such as North America and Europe, while Asia and Oceania is forecast to be the largest region in terms of voice revenues by 2025 due to its slower declines.
Declines in this segment open the door to consolidation and outsourcing. An increasing number of national CSPs will outsource their international voice services to more cost-effective international wholesale specialists in response to pricing pressures from dropping retail prices. This outsourcing will increase the wholesale share of international voice revenues in all regions. Consolidation in this segment will create fewer, larger players that will have better economies of scale to support the business that remains.
Asia and Oceania
Wholesale National Voice Revenues Continue to Fall
Wholesale national voice revenues are also falling, from US$23.9 billion in 2019 to US$17.7 billion in 2025 at a CAGR of -4.9%. Revenue is in sharp decline in markets where historically wholesale revenue has been highest, and competition is fierce. For example, in 2019 Europe accounted for 29% of the total market share but is forecast to shrink to 20% by 2025.
As with international voice, national voice revenue declines are due to migration to VoIP and increasing use of messaging services, and wholesalers are carrying an increasing proportion of retail minutes as smaller provider outsource voice traffic. The greatest increases in wholesale national voice will be in markets with the greatest decline in total voice revenue, and where termination rates are high, such as Japan and South Korea.
In markets where retail voice volumes are still growing, wholesale demand is small as incumbents dominate market share. For example, wholesale national voice revenues are expected to grow in the Middle East and Africa between 2019 and 2021 but are expected to decline thereafter.
Asia and Oceania
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