Telecom service providers (SP) must continue to focus on cost control to offset relatively flat revenue growth over the next five years.

This is according to research group Ovum, which believes telcos have the potential to gain greater economies through their global vendors in terms of network rollout, network operations, network optimisation, customer experience, and service quality management.

The company's latest findings forecast just a 2% annual growth in telecom SP revenues between 2012 and 2018.

Reasons for the decline can be attributed to carriers struggling with increased over-the-top (OTT) competition, end users who are more interested in buying devices and apps than services, and limited customer appetite for usage-sensitive billing.

“Service providers will keep a tight rein on their capex budgets, but they do need to spend heavily on technology – both their customers and the competition demand this.

"What’s changing is that operators are more smartly attacking their operating expense (opex) budgets, which opens new opportunities for vendors.

“However, to take full advantage of this growth opportunity, it’s crucial that vendors have a true understanding of telco opex – something, which until now has been complicated by the lack of granularity and consistency in carrier financial reporting, amongst other barriers

“If you’re an operator, this is a huge cost that needs to be managed.

"As operators look to lower operating risks and their cost bases, one option is additional services projects that involve the transfer of employees.”

However, to meet operators’ needs vendors will have to develop far more complex solutions for carriers than in the past according to Walker, who says:

“While services projects don’t come with guarantees of profitability, there is clearly some upside for vendors as carriers look to outsource more of their operations.

"As telcos explore this, vendors need to be creative and aggressive about winning the business – but should not forget to protect themselves."