Expenditure on telecom services and pay-TV services in Europe, the Middle East, and Africa (EMEA) saw a 2.4% year-on-year uplift in 2022, reaching a total of $449 billion (€400.18 billion), according to International Data Corporation’s Worldwide Semiannual Telecom Services.
IDC is also predicting that spending in the EMEA region on telecom and pay-TV services will grow by 2.7% this year, reaching a total of $461 billion. This revised forecast reflects a slightly more optimistic outlook compared to the version published in November of last year. IDC attributes this acceleration to the rise in telecommunication service tariffs driven by inflation.
The Latest IMF forecasts indicate that inflation is expected to persist for at least the next three years, implying that operators will continue increasing tariffs. Consequently, customers will have to pay more for services, resulting in the overall nominal value of the market growing at a faster pace. Therefore, IDC has revised its forecast upwards not only for 2023 but for the entire first half of the forecast period.
In 2022, spending on telecom services in Europe recorded a modest growth rate of 1.1% year-on-year. This relatively low level of growth can be attributed to two factors. Firstly, the war in Ukraine and the subsequent economic sanctions imposed on Russia, which is the largest market in the Central and Eastern Europe subregion. Secondly, significant economic slowdown in major Western European economies due to a drastic increase in interest rates. Conversely, the MEA subregion experienced healthy growth of 5% in telecom services spending, driven by less-developed countries in Sub-Saharan Africa with lower market saturation.
European telcos are expected to continue investing in advanced telecommunications technologies despite prevailing and projected inflation. Telecom service providers anticipate that the migration to all-IP and new-generation access broadband will help compensate for declining revenues from fixed and mobile voice services. They also believe that the advent of 5G will unlock new opportunities by enabling massive machine-type and ultra-reliable low-latency communications.