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The golden age of telecoms growth and prosperity is waning, according to Ovum.

Research from the global analyst firm predicts that global connections will grow by a CAGR of less than 4% between 2012 and 2018, while global revenues will grow at less than half that rate. As growth slows and ARPU continues to decline, operators will need to find new ways to serve customers more profitably, not just focus on increasing subscriber numbers, says Ovum.

According to Ovum’s figures global mobile connections will grow from 6,5-billion in 2012 to reach 8,1-billion by 2018, while annual mobile service revenues will rise from US$968-billion to US$1,1-trillion.

However, global service revenues will contract in 2018 for the first time in the history of the mobile industry, declining from 2017 levels by 1% or US$7,8-billion. As such, over the next five years, innovation in services, tariffs, business models, network operations, and partnerships will be key revenue-generating strategies.

Sara Kaufman, analyst for Industry, Communications and Broadband at Ovum and author of the report, says, “Growth will continue to slow in most markets around the world. When you compare connection and revenue CAGRs, it is clear that mobile operators are facing a new reality: they must do much more with much less.

“Consolidation will help to alleviate some market pressures and is inevitable in many markets. But the need for revenue stabilisation is becoming paramount for a sustainable future.”

According to Kaufman, operators in developed markets face particularly challenging times. Connections in Western Europe will grow by a CAGR of less than 1%, while revenues will decline at a CAGR of 1,48%. Several other developed markets will see year-on-year revenue declines in 2018, including the US, which will begin to show signs of its maturity.

Much of the revenue decline will be driven by falling ARPU, which will continue to decline across all markets by a 2,7% global CAGR between 2012 and 2018. The greatest decline will be in the Middle East, where ARPU will fall by a 2,5% CAGR. However, Kaufman notes, “ARPU cannot fall indefinitely. In markets with very low ARPU, it will reach a floor and then stabilise.”

Despite the global trend, some growth opportunities will still exist, particularly in Africa, where revenues are expected to grow at a CAGR of 4,2% throughout the forecast. No other region in the world will see revenue growth at a CAGR above 3% during the forecast period. Select markets in Asia-Pacific and South & Central America will also drive growth over the next five years.

Africa will also have the fastest-growing connections, increasing at a CAGR of 5,6% between 2012 and 2018, and ending the period with just over 1-billion connections. Growth in Asia-Pacific will slow, but this region will remain the biggest contributor of new connections, driven largely by China, India and Indonesia.

Connections in this region will total 4,2-billion in 2018 and will account for 57% of net additions globally through the forecast period.