Telco B2B diversification at the top end of the enterprise market can come with a big tradeoff—smaller deals and lower profits. CSPs need to be smart and selective to successfully build growth outside of their connectivity comfort zone.

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Summary

Large enterprise total contract value (TCV) among the world’s leading telcos has plummeted by almost 40% since 2014. Omdia’s extensive time-series data confirms an uncomfortable truth: Telco B2B diversification at the top end of the enterprise market comes with a big tradeoff—smaller deals and lower profits. But if long-term growth lies in beyond-connectivity services, then communication service providers (CSPs) must learn to work smarter and more selectively outside their connectivity comfort zone.

Telco revenue from large B2B deals has faltered 

Aggregate TCV of telcos’ largest enterprise deals has declined by a whopping 36% since 2014, according to Omdia’s latest Telco Global Services Outlook (Figure 1). This annual report analyzes the 1,000 most significant enterprise managed services deals globally, based on disclosures from a dozen service providers including Colt, Orange Business, Telefónica, and Telstra, among others.

Figure 1: Total contract value (TCV) of the top 1,000 telco B2B deals, 2014–23 Figure 1: Total contract value (TCV) of the top 1,000 telco B2B deals, 2014-23 Source: Omdia

 

The same number of deals was worth $33.8bn in 2014, but only $21.7bn in 2023 (the most recent full-year results shared with Omdia). Importantly, the connectivity contribution to large enterprise deal TCV has also fallen—connectivity accounted for 44% of deal value in 2014, by 2023 this was 38%. 

If less than half of TCV comes from connectivity—a major shift that could be lauded as a powerful achievement—why are CSPs not faring better financially?

What is behind deal decline?

A combination of reasons explain today’s dangerous situation:

  • Mediocre win rates for beyond-connectivity services: Despite considerable gains, telcos are not winning beyond-connectivity services such as cloud, application services, and other emerging services at a high enough volume to offset connectivity declines.
  • Falling margins in beyond-connectivity services: Competition from cloud providers and their partners is driving down margins—notably in cloud services. These competitors are expanding into security solutions, business applications, and the resale of core connectivity.
  • Competitors dominate complex project control: System integrators keep telcos at arm’s length from large deals, retaining deal value by orchestrating complex solutions.
  • Telcos struggle with deal complexity: Several CSPs have disclosed to Omdia that multi-service deals present serious bid management challenges. Missed deadlines are common; producing a fully-priced response to a proposal request remains a difficult process.

How should CSPs stem the decline?

Today, financial disappointment in large enterprise activities is triggering dramatic changes in telco B2B strategies, including:

  • Going back to basics: Some CSPs, like Telstra, are returning to their connectivity core and selling off other pursuits. This may help control margin but may not solve the growth problem.
  • Focusing on a major adjacency: Some CSPs are narrowing focus to a particular rational adjacency that matches their capabilities and resonates with customers. For example, Orange Business developed a compelling cybersecurity portfolio that also addresses enterprises’ rising sovereignty concerns. This offers considerable potential but also demands investment in hard-to-find skills and certifications to establish legitimacy.
  • Refocusing on select B2B segments: If large enterprises are risky business, other B2B segments could drive successful diversification. Take KPN, which has returned to vigorous B2B growth by focusing on small- and medium-sized enterprises—of which 70% now also use a KPN managed security service. Nevertheless, this still requires investment in digitalization of sales and marketing to manage cost and customer experience.

Developing new sources for long-term growth requires telcos to step up investment in innovation. This goes beyond simply building internal expertise. However, CSPs cannot chase every shiny object. They must be smart and selective in establishing technology and go-to-market partnerships, and keep their eyes on the prize of revenue growth.

Appendix

Further reading

Telco Global Services Outlook 2025: Finding Growth Beyond Connectivity (May 2025)

Author

Cindy Whelan, Practice Leader, Telco B2B Strategies

[email protected]