Cellular IoT connectivity revenues hit €12.4bn in 2023

Hot on the heels of releasing data predicting that cellular internet of things (IoT) antenna shipments will likely grow at a compound annual growth rate (CAGR) of 14.9% to reach 1.2 billion by 2028, IoT market research provider Berg Insight has published a report showing global IoT connectivity revenues increased 16% to reach €12.4bn in 2023.

Among the key findings of Global M2M/IoT communications market study was that the advancement of the IoT connectivity industry is driving a shift towards greater focus on reliability, security and support for international deployments, contributing to new types of market dynamics for providers. By 2028, Berg Insight projects that there will be as many six billion IoT devices connected to cellular networks worldwide, generating annual connectivity revenues of €21.0bn.

Berg noted that international connectivity constitutes one of the largest and fastest growing segments of the cellular IoT market. Mobile operators with regional and multi-regional operations are naturally positioned to offer IoT connectivity services for international deployments at competitive rates, leveraging their network footprints and ability to negotiate favourable roaming agreements.

Looking at the commercial value of the industry, Berg calculated that the top 10 mobile operators reported a combined active base of 2.9 billion cellular IoT connections at the end of 2023, accounting for 88% of the total 3.3 billion connections.

China Mobile was cited the world’s largest provider of cellular IoT connectivity services with 1.32 billion cellular IoT connections. China Telecom and China Unicom ranked second and third, with 527 million and 494 million connections respectively.

Vodafone ranked first among the Western operators and fourth overall with 184 million connections, followed by AT&T with 128 million in fifth place. Deutsche Telekom and Verizon had in the range of 50-57 million cellular IoT connections each. Telefónica, KDDI and Orange rounded out Berg’s top 10 with around 41 million, 40 million and 37 million connections respectively. The study also found that the growth in the installed bases of the largest mobile operators varied, with changes ranging from a 1% decrease to a 31% increase year on year (YoY).
 
Berg also noted that IoT managed service providers were playing a key role in the ecosystem. The analysis calculated that altogether, IoT managed service providers had more than 200 million cellular IoT connections under management at the end of 2023 and around €1.7 billion in annual revenues.

The study added that most players were operating as full MVNOs, typically offering IoT connectivity services based on a mix of roaming and local access agreements and sometimes also value-added services targeted at vertical segments. It cited the examples including 1GLOBAL, 1NCE, Aeris, BICS, Cubic Telecom, emnify, Eseye, floLIVE, Soracom, KORE, Tata Communications, Telit Cinterion, Velos IoT and Wireless Logic.

Yet even though it was predicting growth in the industry, Berg cautioned that the priorities of many mobile operators and their IoT businesses could grow to become increasingly misaligned, as the telecom industry trends towards increased consolidation of operations to key markets and integration of fixed and mobile network operations.

Berg suggested that this has led to a greater separation between mobile operators’ IoT businesses and network operations, resulting in more open approaches to global network access in line with the strategies of IoT managed service providers. That said, it believed established IoT managed service providers however typically had more advanced localisation capabilities through IMSI and eSIM profile donor agreements.

Berg Insight believes that the separation of IoT connectivity businesses and networks will continue, driven by changing industry dynamics and a shift to new eSIM technologies. This implies a strong case for global consolidation of cellular IoT connectivity platforms.