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31 October 2017
| James Pearce
Analysys Mason analyst Catherine Hammond found that smaller enterprises, rather than larger ones, will provide a key growth opportunity for driving telco revenue growth.
"Micro enterprises will be significant contributors
to sustaining and growing enterprise revenue for operators in
At a global level, operator revenue from traditional
enterprise voice and data services is in decline. Significant
growth opportunities still exist in emerging markets, but will
gradually diminish as penetration approaches saturation.
At the same time, there exists a rapidly growing global
market for enterprise ICT services, often delivered through the
cloud. Enterprise business requirements for telecoms services
are extremely diverse and the challenge for operators is to
identify and successfully target growth opportunities within
different regions and business segments. This article draws on
our recently published global enterprise forecasts to
highlight opportunities within the micro enterprise
Revenue from legacy services will eventually decline
for operators in all regions
In high-income markets, most large telecoms operators are
already experiencing a decline in their enterprise revenue.
This is a consequence of price competition as operators
struggle to differentiate themselves in largely saturated
markets, and face increasing competition from substitute OTT
services and cloud based alternatives.
The situation for operators in emerging markets is more
positive; we forecast that Emerging Asia-Pacific will
experience enterprise revenue growth of 2.6% p.a. between 2017
and 2022. Sub-Saharan Africa will experience a similar rate of
growth, but from a much lower base, while Central and Eastern
Europe and the Middle East and North Africa are also forecast
to enjoy healthy rates of growth in this period. However, if
founded only on an increasing penetration rate, this growth
will not be sustainable in the longer term.
Micro enterprises offer prospects for revenue growth
in all regions
Micro enterprises (organisations with fewer than 10
employees) will be significant contributors to sustaining and
growing enterprise revenue in all regions. We estimate that
micro enterprises currently account for 40% of global
employment but less than 20% of operators’
enterprise retail revenue. Differences in business
demographics mean that the share of enterprise revenue from
micro enterprises varies considerably by region, but we
forecast growth in this segment to outpace that of other
segments in almost all regions apart from Emerging Asia-Pacific
and the Middle East (where revenue growth is still significant
for all sizes of enterprise).
In middle-income markets, growth for the micro enterprise
segment will arise principally from an increase in the
provision of fixed and mobile data services – more
broadband connections and greater provision of mobile handsets
and smartphones to employees. As telecoms services become
ever more integral to the business requirements of a wide range
of micro businesses, operators would do well to provide
competitive business-grade products targeted at this market.
Engaging with these enterprises as business customers
rather than servicing them through consumer channels will
better enable operators to deliver a wider range and higher
quality of services as their business requirements
New ICT services provide an opportunity to increase
revenue and reduce churn
In high-income markets, most opportunities for growth in the
micro enterprise segment will arise from demand for ICT
services such as security, data storage, and
software-as-a-service (SaaS). These services are often
characterised by low entry prices and scalability, which make
them an ideal fit for the financial capabilities and ambitions
of micro enterprises. The internal IT capabilities of such
enterprises is typically low, as is their capacity to manage
multiple contracts with multiple suppliers. Operators already
providing voice and data connectivity services to this segment
are well-placed to gain significant market share if they can
deliver suitable off-the-shelf products and services and can
adapt their sales channels and customer support appropriately.
Swisscom, for example, targets some of the smallest micro
enterprises (up to 5 employees) with a service bundle which
includes Internet failover, automatically diverting businesses
onto its mobile data network in the case of fixed-line outages.
Cloud storage, Microsoft 365 and unified communications
solutions are easily available as add-ons and personalised
advice is available either via a phone call, or a face to face
meeting with a business specialist in one of
Swisscom’s network of shops.
A similar opportunity exists for operators to deliver ICT
services to small and medium enterprises. In high- and
middle-income markets the use of cloud services is already
widespread for these segments but will continue to
expand, and enterprises in emerging markets will increasingly
require similar services. Several operators are addressing this
by offering bundles suitable for specific industry verticals,
for both micro enterprises and larger SMEs.
Vodafone’s Ready Business solutions for example
(targeted at industries including construction, retail,
logistics and manufacturing) have met with initial success in
several markets, resulting in increased ARPU and decreased
Analysys Mason is helping a number of clients to develop
their enterprise strategies, both through our published
research and through consulting projects. As well as the global
enterprise forecasts referenced in this article we also publish
regional- and country-level forecasts and analysis. For further
information, or if you wish to discuss this further, please
contact Catherine Hammond (Senior Analyst) or Tom Rebbeck
(Research Director, Enterprise and IoT).