Telecoms carriers set sights on IT space

As traditional revenues decline carriers will look to new areas to boost their business, analyst firm Gartner claims

More carriers could be set to move into the IT arena to offset muted growth in their core telecoms market according to Gartner.

The research house highlighted IT and media as two markets where ambitious telecoms firms may look to invest over the coming years, but predicted that more than half of these new ventures will fail.

It also pointed out that some of Europe’s big players have already made the leap into new markets, highlighting BT Global Services’ integrated IT services partnership with HP and Telecom Italia’s recent transformation into a media firm.

BT was among a string of national incumbents to increase its footprint in the IT channel last year through acquisition with its blockbuster move on reseller Dabs.com. And Belgacom in Belgium and Dutch KPN both made sizeable purchases in the IT services arena.

According to Gartner, carriers will continue to target non-core markets as growth from traditional activities declines. It expects the total telecoms services market to increase modestly from $1.3tr to $1.5tr over the next four years, with growth slowing to as little as 1.7 per cent in 2010.

But Gartner’s research vice president Martin Gutberlet, is sceptical about how many will successfully foster new revenue streams: “This type of diversification carries a high risk of losing focus on today’s core business priorities such as customer retention and cost cutting, with no guarantee of increased revenue growth in the long-term.

“It will take more than just hiring a few media or IT executives for carriers to succeed in these new markets.”

Nick Jones, vice president at Gartner, urged carriers to instead focus on honing the services they already offer to exploit their existing customer base. He advised incumbents to either improve networking access activity or embrace internet-based services by becoming an aggregator.