The traditional “moat-building” business model adopted by telcos is no longer viable. If telcos are to compete with internet giants in 2030, they must fundamentally change as organisations. Part 1 of our Telecoms 2030 series outlines this need for change, providing three possible business models for the telco of 2030 – Servco, Infraco and Techco.

Telco revenues have stalled while leading tech players have surged ahead

In 2019, the 160 or so listed telecoms operators generated revenues of around US$1.45 trillion compared to around US$1 trillion for seven internet giants. Between 2019 and 2023, telecoms industry revenue grew around 8% (i.e. a compound annual growth rate below inflation) compared to a whopping 80% for the internet players. See the below graph.

Annual revenue, 2019 and 2023

Selected leading tech companies: Alphabet, Alibaba, Amazon, Apple, Meta, Microsoft, Tencent (Tencent 2023: the number used is for 12 months ending 30 Sept 2023)

Source: Operator annual reports and STL Partners analysis

Furthermore, the capital markets believe that future growth will come from tech players and not from telcos

In 2019, the capital markets had already anticipated that the seven tech giants would generate more profit going forward than the telecoms industry. Hence, a market capitalisation for them of US$6 trillion compared to an aggregate US$4 trillion for all listed operators. By 2023, the gap had widened. Telcos’ market capitalisation at the end of the year had dropped by nearly a third to US$2.7 trillion while that of the tech players had increased by 75% to over US$10.4 trillion, as illustrated by the graph below.

• The net present value of future cashflows from Alphabet, Alibaba, Apple, Meta, Microsoft and Tencent was believed to be more than four times that of the entire telecoms industry.

Market capitalisation, 2019 and 2023

Selected leading tech companies: Alphabet, Alibaba, Amazon, Apple, Meta, Microsoft, Tencent

Source: Operator annual reports and STL Partners analysis

This report is the first of three focused on telecoms strategy and transformation

Table of contents

• Executive summary
• Introduction
• Framework for analysis
• What could telcos look like in 2030?
• Conclusions
• Coming next

Related research

• MWC 2024: More than AI and APIs
• Employer brand: How to win strategic telecoms talent
• Inside the cloud-native telco
• Automation: Reaching full potential
• Telco to Techco: Six tenets for success

Author

Chris Barraclough

CEO

Chris is the CEO at STL Partners and is a key contributor to both consulting and research at the firm. He has over 30 years’ experience in strategy and growth —25 in telecoms and technology working with telcos, data centre providers, and tech companies. Before co-founding STL Partners in 2004, he consulted for telecoms companies such as Verizon Business and Orange. He was also an equity analyst at JP Morgan. He holds an MA in English Language and Literature from Oxford University.