What future for MNOs?
In our secure transactions industry, we have been in relations with Mobile Network Operators (MNOs) for years, on all kinds of topics: SIM cards and their evolutions, payment with or without NFC, IoT with endless talks about communication standards, etc…
And what comes up from all these discussions is that globally, Telcos have been trying to invest on various topics, just to realize later that their partners were faster, more efficient, or simply more agile than them, and there was no place left for them to bring value added services. Despite numerous attempts, Carriers are still in the same situation as a few decades ago: they are just communication pipes. Over the last years, the huge added value generated in communication services has mostly been captured by the GAFAM at the expense of the Telcos.
Of course, not all diversification attempts were failures: MNOs are now significant players in mobile money by Vodafone, Orange, Airtel, MTN, and many more. Also, some operators own television channels and other distribution networks, to show football matches and other contents. But these diversification projects remain marginal.
For decades, Carriers have been facing a growing investment need, when implementing 3G, 4G, 5G and very soon 6G. However, many of them have not seen the return on investment they expected and they are still not profitable enough to satisfy their shareholders.
MNOs have been evolving over time, conquering new markets and expanding on new locations. One may think of the global coverage of Vodafone, Telefonica, Orange and also MTN, far away from their original location. Another aspect that shows the poor profitability of the Telco position is that no other industry players are acquiring MNOs. And among the MNO industry, it is interesting to notice that the European operators are expanding worldwide but have not been the target of acquisitions from non-European Operators: AT&T, Verizon, China Mobile, or NTT have not even tried to acquire European Telcos. Is this due to a strong European protectionism or just because of elements like the heavy weight of regulation and the poor profitability make them unattractive?
So, what is the future outlook for this Carrier industry? Low profitability level, due to competition and regulation combined with the requirement for a permanently high level of investment to implement new technologies does not make this industry very attractive. But as we all need their infrastructure and services, what should we do to keep our Mobile Network Operators alive?