MTN Consulting took a deep dive, analysing 32 telcos’ spending on operations from around the globe
MTN Consulting has published a report based on its analysis of trends in 32* telcos’ opex from 2016 to 2023. Perhaps the biggest message is that managing opex wisely is essential for telcos to thrive and increase profitability. While this is not big surprise to anybody in the sector, the numbers make interesting reading.
In 2023, telcos’ revenues worldwide fell 0.5% year on year to $1,778.1 billion, marking the lowest in a decade. This was due to currency fluctuations, particularly in Japan, and limited opportunities to make money from 5G, according to MTN.
Total opex fell by 1.0% in 2023, but excluding depreciation and amortisation (D&A), it declined by 0.5%, or about the same rate as the decline in revenues. The difference is D&A, which fell more steeply at 3%. D&A has become the largest opex category, rising to 23.4% of opex in 2023.
Network-related opex, encompassing operations, leasing, utilities and D&A, account for 50.8% of total opex, although this varies between companies.
Overall, network operations’ costs rose from 16.5% of opex in 2016 to 18.4% in 2023. Network leasing opex declined several years ago due to new accounting rules (IFRS 16) and are now steadily in the 3.0 to 3.5% range.
Labour costs are rising too as telcos compete for digital talent and embrace automation. As a percentage of total opex, labour costs increased from 16.2% in 2016 to 17.4% in 2023.
The report’s findings underscore telcos’ need to standardise opex tracking and implement transformative measures to enhance profitability, says MTN. By benchmarking costs and uncovering inefficiencies, telcos and vendors can better navigate industry challenges and opportunities it adds.
*Companies included in the survey were: Advanced Info Service (AIS), Airtel, Batelco, BT, Charter Communications, China Mobile, Chunghwa Telecom, Du, Etisalat, Globe Telecom, KDDI, KPN, LG Uplus, Megafon, MTN Group, Oi, Ooredoo, Orange, PLDT, Proximus, Saudi Telecom (STC), Singtel, SK Telecom, Starhub, Swisscom, Tata Communications, Telecom Argentina, Telecom Italia, Telkom Indonesia, Telus, Turk Telekom, and Veon.