International Wholesale Carriers – New Business Models & Growth Drivers in the Digital Transformation Era

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Published: May 31, 2017 Report Code: TC0086IR-ST

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"International Wholesale Carriers – New Business Models & Growth Drivers in the Digital Transformation Era", a thematic research report by GlobalData, examines the changing dynamics, the new growth drivers and business models of the global international wholesale industry. It lays out, for international carriers, the critical considerations and strategic options for taking the journey to the wholesaler of the future, from the business model drivers to the necessary portolio evolution requirements.

Data and insights are derived through a mix of secondary research, qualitative primary research and GlobalData’s industry databases and expert analysis.

The report is structured as follows –
– Market Context: Winds of Change in the Global Telecoms Industry. This section provides an analysis of the current and future dynamics shaping the telecom industry, from data traffic explosion to IoT, cloud and virtualized networks.
– The Evolving Global Wholesale Market. Here we examine the impact of the changing telecom industry dynamics on the global wholesale market, in terms of revenues, margins, traffic and growth drivers. We also look at the evolving nature of demand for wholesale services.
– Positioning for a Wholesale Future: An Assessment of Strategic Options. This section defines the different wholesale carrier strategic groups – based on their portfolio breadth, network depth and business purpose – then assesses and lays down the different strategic options – in terms of business models and strategic actions- available to each group to position itself successfully for a wholesale future.
– The Changing Nature of Wholesale Service Portfolios. Along with the strategic positioning options detailed in section 3, here, we give an overview of how wholesale portfolios should evolve and expand to meet the new demand dynamics coming from traditional and new customers.
– Case studies: Telco approaches to digital transformation. We continue with a review of the strategies, positioning and product portfolio of a number of carriers that have started their journey to the wholesaler of the future, along with others that urgently need to.
– Key findings and recommendations. We conclude the report with a set of key findings and recommendations on the international wholesale industry’s evolving dynamics, new growth drivers and business models, and we also provide strategic recommendations for international carriers to position themselves for growth.

Scope

– The global telecoms industry is in a state of transition, retail telco providers are seeing their models disrupted by a series of systemic threats and new digital opportunities. These winds of change are impacting global wholesale providers, as traffic fundamentals and traditional economics get upended and as the nature of the wholesale demand changes. Global wholesalers need to evolve towards new business models and service portfolio in order to unlock the new wholesale growth drivers in the digital transformation era.

– Traditional wholesale voice traffic margins have been in persistent decline over the past three years, this has put substantial pressure on carriers to accelerate their rollout of new services. The explosion of data traffic, by contrast, is breathing new life into the wholesale business. Network services and managed services segments have become strategically vital to the outlook of many players.

– Wholesale providers face sustained demand from traditional customers whose requirements are rising in complexity (e.g. pay-as-you go billing, dynamic bandwidth allocation). There is also the emergence of new demand channels from retail providers of various stripes (Cloud providers, MVNOs, OTTs, MNCs).

– As they seek to transform, the strategic options available to wholesale providers are a function of each individual player’s strategic position in the wholesale market, the depth of their product portfolio, the reach and depth of their network – and most critically, their overall business purpose.

– Depending on the wholesale carrier group, the strategic options may include actions such as portfolio expansion, M&As, reducing exposure to voice, targeted investments, units combination, new pricing structures. These are thoroughly detailed in the report.

Reasons to Buy

– The report examines the changing dynamics, the new growth drivers and business models of the global international wholesale industry.

– The report provides valuable insights and recommendations for international carriers on the critical considerations and strategic options for taking the journey to the wholesaler of the future and position for growth.

– The report’s case studies provide real examples of market approaches, postitionning, product portfolios and strategies being employed by a number of carriers that have started their journey to the wholesaler of the future, along with others that urgently need to.

Aicent
AT&T
AWS
BICS
BT Global Services
BT Wholesale
China Telecom
Colt
Comfone
GCX
Google
iBasis
IDT
KPN
Lebara
Level 3
LycaMobile
Mac
Microsoft
Orange
PCCW Global
SAP
Syniverse
Tata Communications
Telefonica
Telenor Wholesale
Telstra
Vodafone
AT&T
AWS

Table of Contents

Table of Contents

Table of contents 3

List of exhibits 6

Executive summary 8

Section 1: Market Context – Winds of Change in the Global Telecoms Industry 10

The global telecoms industry is in a state of transition 11

Data explosion and the OTT disruption 12

Migration to the cloud and virtualized networks 13

Getting ready for a new world: IoT growth 14

Section 2: The Evolving Global Wholesale Market 15

The global wholesale market is not immune from broader industry headwinds 16

A pervasive decline in traditional international voice traffic flows 17

Voice revenue is declining and margins are getting tighter 18-19

Roaming regulations have compounded the pressure on wholesale termination 20

The data bandwidth explosion is breathing new life into wholesale 21

The data segment is already driving wholesale business growth 23

Wholesale carriers are investing in subsea cable projects to respond to the data bandwidth explosion 24

The evolving nature of demand for wholesale services 25

From bulk transport to strategic wholesale solutions 27

Section 3: Positioning for a Wholesale Future – An Assessment of Strategic Options 28

Drivers of strategy: portfolio breadth, network depth and business purpose 29

Where individual wholesale units fall 30

Strategic options are a function of wholesale carrier strategic groups 31

Strategic options: the stand-alone wholesale voice focused provider 33

Strategic options: the stand-alone wholesale mobile data focused provider 34

Strategic options: the stand-alone wholesale network services focused provider 35

The support wholesale voice/data focused provider – overview of strategic options 36

The support wholesale voice/data focused provider – global scale means more options 37

The support wholesale voice/data focused provider – narrow scale means high-risk zone 38

Strategic options: the support wholesale network services focused provider 39

Section 4: The Changing Nature of Wholesale Service Portfolios 40

The new addressable base is forcing wholesale providers to expand their portfolios 41

LTE roaming – the next step 42

Network services – cloud transit 43

Network services – bandwidth on demand 45

Wholesale analytics 46

White label IoT solutions 47

Vertically-focused wholesale solutions 48

Section 5: Wholesale Carrier Case Studies 49

BICS 50

Tata Communications 54

Syniverse 58

Section 6: Key Findings and Recommendations 62

Appendix 66

Acronyms and definitions 67

Companies mentioned 68

About the authors 69

Contact information 70

Table

List of Tables

Exhibit 1: Key retail telecoms industry trends 11

Exhibit 2: Global mobile broadband connections 12

Exhibit 3: Sample telco NFV plans 14

Exhibit 4: Global B2B IoT connections 14

Exhibit 5: Overview of key wholesale market macro trends 16

Exhibit 6: Average annual decline of international voice traffic – 2013-16 17

Exhibit 7: Quarterly revenue growth for sample global carriers 18

Exhibit 8: Voice margin for sample global carriers (2016) 19

Exhibit 9: EU wholesale roaming rates 20

Exhibit 10: Kenya used international capacity growth 21

Exhibit 11:Singapore 4G and fiber penetration 22

Exhibit 12: Singapore international capacity sold – 2011-14 22

Exhibit 13: Voice vs. data margin growth for sample operator 23

Exhibit 14: Data contribution to wholesale margins for sample operators 23

Exhibit 15: Sample wholesale carrier subsea cable projects 24

Exhibit 16: Evolution of demand dynamics 25

Exhibit 17: Wholesale services demand landscape 26

Exhibit 18: Key drivers of wholesale carrier strategy 29

Exhibit 19:Strategic mapping of global wholesale carriers 30

Exhibit 20: Key wholesale carrier strategic groups 31

Exhibit 21: Global wholesale carriers’ strategic options mapping 32

Exhibit 22: Overview of Telstra’s cloud gateway service 44

Exhibit 23: Overview of Microsoft Azure express route connectivity partners 44

Exhibit 24: COLT on demand – sample key usage steps 45

Exhibit 25: BICS – main sources of wholesale business margins (2015) 50

Exhibit 26: BICS – evolution of wholesale traffic 51

Exhibit 27: BICS – evolution of wholesale revenue & margins (2011-16 CAGR) 51

Exhibit 28: BICS – wholesale strategy 52

Exhibit 29: Tata Communications – structure of revenue (2016F) 54

Exhibit 30: TCL – voice vs. data services growth 55

Exhibit 31: TCL – voice contribution to revenue and EBITDA 55

Exhibit 32: TCL – structure of total addressable opportunity 56

Exhibit 33: Syniverse international presence build-up 58

Exhibit 34: Syniverse key roaming product lines (2016) 59

Exhibit 35: Evolution of Syniverse revenue 60

Exhibit 36: Syniverse LTE roaming coverage for GSM operators 60

Exhibit 37: LTE vs. non-LTE roaming traffic 61

Figures

List of Figures

Exhibit 1: Key retail telecoms industry trends 11

Exhibit 2: Global mobile broadband connections 12

Exhibit 3: Sample telco NFV plans 14

Exhibit 4: Global B2B IoT connections 14

Exhibit 5: Overview of key wholesale market macro trends 16

Exhibit 6: Average annual decline of international voice traffic – 2013-16 17

Exhibit 7: Quarterly revenue growth for sample global carriers 18

Exhibit 8: Voice margin for sample global carriers (2016) 19

Exhibit 9: EU wholesale roaming rates 20

Exhibit 10: Kenya used international capacity growth 21

Exhibit 11:Singapore 4G and fiber penetration 22

Exhibit 12: Singapore international capacity sold – 2011-14 22

Exhibit 13: Voice vs. data margin growth for sample operator 23

Exhibit 14: Data contribution to wholesale margins for sample operators 23

Exhibit 15: Sample wholesale carrier subsea cable projects 24

Exhibit 16: Evolution of demand dynamics 25

Exhibit 17: Wholesale services demand landscape 26

Exhibit 18: Key drivers of wholesale carrier strategy 29

Exhibit 19:Strategic mapping of global wholesale carriers 30

Exhibit 20: Key wholesale carrier strategic groups 31

Exhibit 21: Global wholesale carriers’ strategic options mapping 32

Exhibit 22: Overview of Telstra’s cloud gateway service 44

Exhibit 23: Overview of Microsoft Azure express route connectivity partners 44

Exhibit 24: COLT on demand – sample key usage steps 45

Exhibit 25: BICS – main sources of wholesale business margins (2015) 50

Exhibit 26: BICS – evolution of wholesale traffic 51

Exhibit 27: BICS – evolution of wholesale revenue & margins (2011-16 CAGR) 51

Exhibit 28: BICS – wholesale strategy 52

Exhibit 29: Tata Communications – structure of revenue (2016F) 54

Exhibit 30: TCL – voice vs. data services growth 55

Exhibit 31: TCL – voice contribution to revenue and EBITDA 55

Exhibit 32: TCL – structure of total addressable opportunity 56

Exhibit 33: Syniverse international presence build-up 58

Exhibit 34: Syniverse key roaming product lines (2016) 59

Exhibit 35: Evolution of Syniverse revenue 60

Exhibit 36: Syniverse LTE roaming coverage for GSM operators 60

Exhibit 37: LTE vs. non-LTE roaming traffic 61

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