IoT connection growth at AT&T, Orange and Telefonica all take a hit due to COVID-19

At Transforma Insights were are currently working out our Communications Service Provider IoT Peer Benchmarking report, due for release in September. As part of the research we dig in to the connections and revenue of the various operators. It's not a critical component of our ranking of them, but it's certainly interesting. And it's particularly interesting reading in the unusual times in which we currently find ourselves. Frankly we couldn't wait to see some Q2 2020 financial results to get an idea of how COVID-19 might have had an impact.

IoT connection growth dries up

Three operators had Q2 2020 data available at time of publication: AT&T, Orange and Telefonica. The chart below shows the quarterly connections increase (or decrease) of each of them.

Telefonica has seen the most pronounced immediate impact. At the end of June 2020 it had 24.3 million IoT connections, up 14% year-on-year, but down 1.7% over the quarter. This decline was entirely driven by Brazil. Germany recorded a healthy 6% growth in the quarter, while Spain and the UK growth rates were 0.8% and 0.3% respectively. Until Q2 Telefonica had grown at a fairly healthy 22% in 2019, with an installed base growing by 4.3 million, compared to 3.3 million in 2018. The UK, in particular, had seen strong growth, largely supporting the national smart meter roll out. During 2019, it increased connections by over 1.5 million, representing a 43% growth. In Q1 2020 alone it added a further 437,000 connections before roll out was halted.

For AT&T, growth in total connections slowed somewhat. Quarterly growth was 2.3 million in Q2, down from 3.5 million in Q1 and 3.7 million in Q4 2019. Compared to 1H 2019, 1H 2020 connection growth was down 18%. Given the market disruption, and AT&T’s exposure to the automotive sector, Transforma Insights sees this as a relatively strong performance. However, we expect that there will be a delayed impact on sales in the second half as new car manufacturing drops to reflect diminished sales.

For Orange, growth in the first quarter of 2020 was 533,000, up 24% compared to Q4 2019, but that fell to 232,000 in the second quarter.

We anticipated this trend. While demand for IoT will have dramatically increased courtesy of COVID-19, the supply side will always be challenged, both in terms of supply chains for delivering hardware and also for the practicalities of deployment.

If you want to know more about Communications Service Provider strategies for IoT, you should check out the Peer Benchmarking report. More details below. If you want to learn more about the report, sign up to our newsletter mailing list on our news page and you will receive details on the report as soon as it is released.

About the Communications Service Provider IoT Peer Benchmarking Report 2020

The report, which is scheduled for publication in September provides in-depth assessment of the role of CSPs in IoT, and detailed profiles of Aeris Communications , AT&T , Deutsche Telekom , Kore Wireless, Orange, Telefonica, Telenor , Telia, Verizon and Vodafone.

For each of the profiles we look at six categories:

• An introductory Background section provides information on the history of the organisation, its structure, size of the team, statistics such as numbers and types of connections, and other salient information.
• The Networks section look at capabilities to support connected devices using both public broadband (e.g. LTE and 5G) and narrowband (e.g. NB-IoT or LoRa) networks as well as private networks installed at the customer premises. This includes consideration of how able the CSP is to support connectivity around the world including via partners and alliances.
• The Middleware section focuses on a diverse set of platforms and the CSP strategies related to them, most prominently connectivity management, device management, and application development. In some cases the company will have built their own. In others they have bought them in from a third party.
• An evolving area of CSP interest is Data Management, including hosting, analytics and capabilities associated with post-event data management such as exchanges and trading platforms.
• As well as providing IoT connectivity and associated functions, many CSPs have Solutions and Services that they sell directly to enterprise customers such as fleet management solutions or track-and-trace. This section explores the approach to addressing vertical sectors either through packaged propositions or through consulting and systems integration.
• Finally, we have an Other section which looks at competitive differentiators and capabilities not otherwise considered in the other sections. This includes security and devices.