Telcos invest in energy efficiency as costs soar

According to new data shared by IDC, telecoms operators are investing in sustainability within their own businesses as well as offering solutions to help customers minimise their carbon footprints too.

Economic pressures, regulatory requirements, and stakeholder expectations are all playing their part in encouraging sustainability activity, but unsurprisingly it’s the first that has the biggest role. Telcos are feeling the pinch when the electricity bill arrives and are taking action accordingly.

IDC cites European heavyweight Orange as a prime example. The telco group spent €1 billion on energy last year, almost double its €579 million billion from just two years earlier. Meanwhile, Italy's TIM is aiming to source 100% renewable energy by next year.

Orange is one of a growing number of telecoms operators to have made a lot of noise about its green credentials in recent times, and not just when it comes to saving energy. IDC cites its efforts in the area of repairing, re-using and recycling devices, highlighting an online store opened by Orange Belgium in March that offers reconditioned smartphones, with a range of more than 8,500 refurbished devices.

At a European level the operator has been talking up its 'Re' programme since 2020, which, as the name suggests, is all about repairing, reusing, recycling and refurbishing devices. This time last year Orange and Tele2 spearheaded a GSMA phone recycling initiative that aims to recover a fifth of operator distributed devices by the end of the decade.

Tele2 also gets a mention from IDC for its endeavours in reducing greenhouse gas emissions, which are more closely linked to the energy-saving issue.

"Tele2 stands out as the leading telco in carbon reduction, having achieved a 97% reduction in Scope 1 and 2 emissions since 2019, making it the first European telco to reach this milestone," IDC said.

Scope 1 and 2 emissions refer to the operator's direct emissions and indirect emissions from energy production.

The other area in which telcos can improve their own footprint is in the upgrade of legacy infrastructure, IDC notes; essentially, the likes of 5G and fibre networks are more energy-efficient than previous technology generations. In this regard it namechecks Deutsche Telekom, which completed the shutdown of its 3G network in Germany as long ago as 2021 to focus on 4G and 5G.

You could argue that telcos are just doing their core job in replacing outdating technology. Indeed, they would struggle to remain competitive if they did not. But the potential for energy – and, crucially, cost – savings, even as network traffic increases, is doubtless having an impact on operators' willingness to invest and the speed at which they do so.

In a similar vein, the analyst firm points to network rollouts in rural areas, which help bridge the digital divide. Again, that's what telcos are supposed to do. But their broader impact on the communities they serve also plays into their sustainability efforts.

The analyst firm hails Orange for its fibre rollouts in Europe. And it points to BT's fibre rollout and upskilling efforts; the UK incumbent has pledged to deploy full fibre to 6.2 million premises in rural communities and help 25 million people improve their digital skills by 2026.

"European telcos are not only motivated by economic considerations, but also by a commitment to regulatory compliance and the growing demand from investors and customers for sustainable business practices," said Masarra Mohamed, senior research analyst at IDC. "Telcos are leading the way in integrating sustainability into their operations and offerings, aiming to reduce their environmental impact while ensuring long-term economic viability."

Telcos may well have other motivations beside money, but it is a strong incentive. Further, IDC notes that access to capital is also encouraging telcos in their sustainability efforts, highlighting a €500 million sustainability-linked bond issuance from Orange and a €850 million green bond for financing energy-efficient network infrastructure from Telefonica.

It's tempting to view operators' green initiatives as a bit of shameless virtue-signalling; let's face it, they all love to toot their own horn on that score. But it's not all hot air. There is some serious money going into energy-efficient technologies and sustainability projects as telcos keep a close eye on their opex.