Communication service providers (CSPs) are sitting with an uneasy sense that the well is running dry. The glow has worn off from the era of abundance that was once the B2C heyday, and in its stead, new technologies bring new demands – and new competition. Today, CSPs must seek sustainable revenue sources to build for the future, even as they contend with razor-thin margins and rising costs. The industry is reaching an inflexion point: find a way to profit, or risk continued margin decline, writes Haifa El Ashkar, the executive director for Corporate Strategy at CSG.
Profitability is the crux of any CSP’s growth strategy. Without it, long-term success is stalled by limiting their ability to:
- Reinvest in the business and build a new platform or network.
- Retain and attract top talent with critical skill sets.
- Return shareholder value that brings in key investors.
The profitability challenge is daunting, but CSPs need not despair – there is a blue ocean to run towards on the horizon. Wholesale holds the opportunity for forward-thinking telcos that seek to leave the crowded shallows and claim a largely untapped market.
A B2B wholesale business model isn’t a novel concept in telecoms, and the shift from connecting consumers to connecting businesses has already taken place. Today, the key is to reinvent the approach and capitalise on the ServCo/NetCo delayering, before new entrants come in over the top.
A new wave of wholesale players
The consumer market remains the single biggest source of income for CSPs, accounting for as much as 69% of the majority’s total revenue. However, it’s a tricky treasure trove to bank on. The decades of growth that operators enjoyed from B2C mobile services left no stone unturned and little room for expansion. Forced to compete on price in a commoditised market, CSPs must depend on competitive displacement to win consumer business, making it difficult to innovate and scale.
An industry-wide pivot to B2B seemed the natural path forward. Promises of profit from going beyond connectivity to create business ecosystems infused fresh energy into the industry. Yet in 2025, this encouraging enterprise avenue still hasn’t panned out as expected. Instead, CSPs find themselves backed into a familiar corner with:
- Declining legacy revenue as traditional wireline is replaced with 5G and fibre.
- Strong competition from more and more companies entering the space.
- Small margins as the increasing volume of players pushes down prices.
CSPs need a way to unlock value and achieve profitability as the demand for fibre and mobile capacity continues to climb. But they ought not to discount wholesale B2B as a viable market – they just need to reinvent the business model.
Wholesale reinvented is the winning B2B playbook for CSPs
Looking ahead to the need for investments surrounding 6G, CSPs are already making calculated moves to free up capital. Delayering and separating into NetCos, ServCos and InfraCos to attract investors and sharing core networks with other entities has solved the immediate need for funding. But it’s also done more than that: it’s opened a new paradigm for B2B wholesale monetisation.
In the past three years, there have been more than 740 announcements of CSPs’ plans to separate into standalone infrastructure companies. These new entities are high growth. Where traditional CSPs are valued at a modest six to seven times their EBITDA, the hundreds of smaller offshoots are valued at upwards of 35 times their EBITDA. Backed by eager investors, they can now innovate and accelerate revenue by offering both traditional and brand-new services amongst themselves in an ever-expanding ecosystem.
The result is a fresh US$200 billion+ industry of third parties that still need comprehensive connectivity solutions to operate as asset-light businesses, and no major players have yet stepped forward to fill the role of orchestrator.
While wholesale has historically represented only a small percentage of CSPs’ revenue, it’s now best-positioned to serve this mushrooming addressable market. Reimagined, it could evolve to become the most profitable arm of the business.
How to capitalise on the wholesale reinvented opportunity
The wholesale opportunity is large, but it is also finite. CSPs that act early and decisively stand to benefit from a glut of profits by staking a claim in this rapidly proliferating market. Those who hesitate may be left to compete on the margins.
To be counted among the winners in B2B wholesale, CSPs should follow these four strategic steps to take advantage of the next blue ocean with confidence:
- Attract high-growth third parties. Make it quick and easy for profitable mobile virtual network operators (MVNOs) to onboard. Ensure they can share their catalogue dynamically and use your platform stack to sell.
- Empower third parties to be successful. Just like consumers, resellers want a simple user experience. Give them the ability to self-service when and how they want by offering an intuitive interface.
- Optimise multi-party cash flow. Clear visibility is key when working with multiple parties. Implement seamless settlement, transparent reconciliation and pay-when-paid controls to help third parties manage cash flow.
- Tap into new revenues. Third parties will ultimately need to find new sources of revenue to remain competitive. CSPs can woo them by unlocking pathways via strategic use cases like multi-asset orchestration, sponsored roaming and entitlement monetisation.
Profitability is imperative for CSPs. By approaching wholesale through a new lens, it’s also attainable, now – for those who act.
Transformation won’t happen overnight. However, CSPs that hesitate to reinvent their business model in pursuit of one killer use case will be left behind to compete in a market dominated by those that jump on this opportunity early.
Working with the right vendor is paramount for CSPs ready to begin positioning themselves to attract high-growth third parties and profit from wholesale reinvented. Reach out to trusted experts at CSG to assess your transformation readiness.
Haifa El Ashkar