Major telecommunications companies consider offering IoT connectivity services as strategically important, though the financial returns do not match this significance. The overall market for IoT is growing, and Berg Insight calculates that there were 2.7 billion cellular IoT connections generating about €10.8 billion in revenues by the end of 2022. The estimated number of IoT devices connected to mobile networks is expected to reach 5.3 billion, generating annual revenues of €21.4 billion by 2027. Despite this growth, the average revenue per IoT connection remains low, at just €0.38 per month.
The market is dominated by some major players, with China’s three main telcos leading in the number of IoT connections. China Mobile is the largest with 1.06 billion cellular IoT connections, followed by China Telecom with 407 million and China Unicom with 390 million. Together, they accounted for almost 70% of the world’s cellular IoT connections. The Chinese government’s active endorsement of large-scale IoT deployments to address societal issues has contributed to their leadership in IoT adoption.
Other major players like Vodafone, AT&T, Verizon, Deutsche Telekom, Telefónica, KDDI, and Orange hold substantial IoT connections as well. However, average revenue per user (ARPU) rates vary depending on the market. China Mobile, for example, generated €2.2 billion in IoT connectivity revenues in 2022, but its monthly ARPU was one of the lowest at €0.19. Efforts are being made to attract enterprises with international operations, such as Verizon Business launching a new platform for seamless international IoT connectivity.
To improve the business case in the future, operators are seeking greater scale and automated operations. Vodafone envisions an “economy of things” where connected devices interact, trade, and transact, while mobile operators focus on adding value-added services, cloud services, and security capabilities on top of connectivity to capture a larger market share. Private LTE/5G is also gaining attention as operators act as managed service providers.
Beyond the major telcos, other IoT-managed service providers like Aeris, Kore Wireless, Velos IoT, 1NCE, and Wireless Logic leverage multiple roaming and local network access agreements to offer international services in western markets, contributing about 150 million connections and approximately €1.5 billion in revenues. The challenge for operators remains to develop value-added services that build on their IoT connections to drive greater revenue levels and enhance the financial viability of their IoT businesses.