A Real Economy publication

Telecommunications industry outlook

Mar 15, 2024

Telecommunications industry outlook key takeaways

Low Earth orbit satellites represent the majority of satellites launched into orbit.

The rise of LEOs is driven by lower latency, lower costs and better coverage. 

Companies must be aware of a changing regulatory environment and potential overcrowding. 

Telecommunications trend #1: The rise of LEO's

Telecom’s final frontier is creating a mega constellation—and mega space junk?
Middle market companies can capitalize on the rise of satellite launches, but they must be aware of regulatory and overcrowding concerns.

Since 2000, over 9,600 satellites have launched into orbit, with LEOs accounting for over 88%. Their popularity stems from lower costs and better coverage, but concerns about space junk and regulatory oversight are growing.

Companies navigating this space must balance innovation with regulatory compliance and environmental responsibility to capitalize on the potential of LEO constellations while mitigating risks.

Telecommunications trend #2: BEAD funding

The Broadband Equity Access and Deployment Program (BEAD) allocates $42.5 billion to bring high-speed internet to underserved Americans. Focusing on unserved areas first, the initiative prioritizes affordability and aims to bridge the digital divide, which disproportionately affects lower-income and minority populations.

U.S. broadband access to expand to underserved via $42.5 billion BEAD funding
The United States’ $42.5 billion BEAD program to extend high-speed internet access will benefit communities, as well as providers and manufacturers.

Telecommunications trend #3: 5G edge computing

5G-supported edge computing is an opportunity and a challenge for all telecoms
With 5G-supported edge computing, telecom companies are working to satisfy the appetite for more high-speed connectivity.

Though still far from perfect, generative AI technologies have the potential to revolutionize many industries, including media and entertainment. Already this industry has quickly adopted these technologies, deploying them in creative processes ranging from generating first drafts of TV scripts to helping customize digital content for individual users.

The new required tax treatment of R&D expenses is also affecting M&A by worsening the tax posture of targets. Transaction planning that includes R&D cost analyses may enable deals to proceed by reducing the cash tax rate. However, the utilization of favorable tax attributes, such as net operating losses, may be limited by a change in ownership, which must be taken into account.

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