Telcos are positioned to benefit financially from decarbonization – study
By Sustainability Matters July 5, 2023
- Up to 60% of subscribers would pay more for carbon-neutral airtime tariffs
- 20%-40% of opex from energy, telcos can gain 4% EBITDA if energy efficient
A study released by GSMA Intelligence demonstrates that telco operators could reduce opex by 4% for a 20% reduction in energy costs through power efficiencies, countering the often-heard excuse that investing in sustainability is costly.
The “Green is good for business: making the financial case in telecoms” report is the second instalment in a three-part series on sustainability, produced in partnership with Huawei, and released at the recent Shanghai Mobile World Conference.
The main motivation for energy-related cost savings is to mitigate the outlay and ongoing expenditure on 5G networks, with the key opex line being power consumption. GSMA Intelligence estimates that for an operator with a 25% EBITDA margin, energy cost savings of 2% translate to a rise in margin of around 0.5%. The impact grows to 1.9% for a 10% energy reduction and 3.7% for a 20% reduction.
“While the net zero and environmental imperative are fundamental, green investments should be seen as good for costs and revenues,” said Tim Hatt, Head of Consulting at GSMA Intelligence. “On costs, energy is still 20-40% of telco opex, and reducing this by 10-20% can feed through to an EBITDA uplift of 2-4%. On the revenue side, we see opportunities from green-linked tariffs, trade-ins and the sale of renewables,” he added.
In addition, customers worldwide are willing to support with their wallet telcos that invest in sustainability. With climate change a top concern, 30-60% of telco subscribers surveyed in 16 countries would pay more for mobile airtime tariffs that are certified carbon neutral.
The report also captures insights from an enterprise survey from six vertical industries and found that improved energy efficiency is now viewed by companies as the second most important factor (23% on average across the six industries surveyed) in moving to a zero-carbon business model, only behind renewables (35%), with other factors (such as changing behaviours and corporate travel) lower down the ranking.
The report can be accessed here.
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