Telecommunication

Telecommunication Services

The Telecommunication Services industry consists of wireless and wireline telecommunications companies, as well as companies that provide cable and satellite services. The wireless services segment provides direct communication through radio-based cellular networks and operates and maintains the associated switching and transmission facilities. The wireline segment provides local and long distance voice communication via the Public Switched Telephone Network. Wireline carriers also offer voice over internet protocol (VoIP) telephone, television, and broadband internet services over an expanding network of fiber optic cables. Cable providers distribute television programming from cable networks to subscribers. They typically also provide consumers with video services, high-speed internet service, and VoIP. These services are traditionally bundled into packages that provide subscribers with easier payment options than paying for each service separately. Satellite companies distribute TV programming through broadcasting satellites orbiting the Earth or through ground stations. Companies serve customers primarily in their domestic markets, although some companies operate in several countries.

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Source: SASB

The telecommunications industry is a significant contributor to global CO2 emissions, with one-third of emissions coming from the direct use of fossil fuels and the purchase of energy and heat. The majority of emissions, around two-thirds, come from the downstream and upstream activities, such as the energy consumption of suppliers. E-waste generated by devices is also a significant issue, with a forecasted increase to 120 million metric tons annually by 2050. The industry requires substantial investments, around $1 trillion of Green Capex per year, to renew its infrastructure. However, the sector also presents an opportunity to invest in energy efficiency and renewables, supporting the annual 60% increase in global data traffic, and creating new revenue streams to address environmental and social issues, amounting to $3.5 trillion.

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Industry Characteristics

• Telcos generate few so-called scope 1 emissions (direct burning of fossil fuels), and scope 2 (purchasing energy and heat). Source: BCG
• ⅔ of  telco’s total carbon emissions are scope 3 emissions are caused by downstream and upstream activities, such as the energy consumption of suppliers. Source: BCG

Sustainability Impact

• The industry accounts for 3 to 4% of global CO2 emissions, about twice that of civil aviation. Source: BCG
• Global electrical and electronic waste (E-waste) generation reached 53.6 million metric tons (Mt) in 2019 and is projected to expand to 120 Mt annually by 2050. Source: WEF

Sustainability Investments to watch

• With global data traffic expected to grow around 60% per year, the industry’s share will grow further unless investments in energy efficiency and renewables can offset the effect. Source: BCG
• Almost $1 trillion of Green Capex is needed per year for telecommunications infrastructure. Source: Goldman Sachs
• $3.5t+ opportunity for telcos to participate in by enabling new business revenue streams by addressing environmental and social issues: health tracking, remote health applications, digital platforms for vocational training, mobile financial trading platforms. Source: GSMA
• The Internet of Things (IoT) is the connection of devices to the Internet using embedded software and sensors to communicate, collect and exchange data with one another. The telco operator can have real-time information about an equipment’s repair, refurbishment, recycling, and maintenance status. Source: KPMG