Telco Email Services: What Options Lie Ahead?

Have we seen the demise of telco email services? At first glance, it looks like that is fast-approaching. Many telcos have shuttered their email platforms due to declining revenue and competition from cloud-based alternatives. But ABI Research believes that there is another path forward, with third-party email providers playing an essential role. Transitioning telco-branded consumer email services to a credible third-party platform can strike the balance between cost and customer management, while also providing opportunities for revenue generation.

Key Takeaways 

• Telco email services are waning. Email was once considered a core telco service offering. However, fiercer competition from free platforms like Gmail and Yahoo Mail has made telco email less appealing to consumers and businesses.
• The telecom industry has three options. The three options available to telcos include continuing in-house development of telco email, shutting down email services altogether, or transitioning services to a third-party provider. Shutting down email services carries the risk of alienating current customers who appreciate the value it provides. Maintaining in-house development is expensive as consumers continue to request advanced features and cybersecurity tactics evolve.
• Transitioning telco email to a third-party provider is optimal. ABI Research believes this is the best option going forward as it generates revenue while outsourcing maintenance and product updates to someone else. The third-party provider typically helps telcos with migrating current email list to the new platform. The transition process must be smooth for customers 

The Fall of Telco Email Services

Telcos have offered email services since the 1990s, when the Internet became more widely accessible to homes and businesses. Offering branded email accounts allowed telcos to stand out from a crowded market and provide additional value to customers beyond voice/communications services. Email services were simple enough for telcos to develop in-house or through commercial software tools. Through the decade, email services were considered a core, value-added service.

By the early 2000s, the email vendor landscape had become saturated. Hotmail, Yahoo Mail, Gmail, and other webmail providers made consumers realize they can get similar complimentary email services that offered richer features, better customer experiences, and larger storage capacity.

The arrival of these new email services platforms caused a ripple effect in the market. Many telcos soon realized they either must innovate their business model or discontinue their email offerings altogether. There is a large graveyard of telco-branded email services that were shut down. Vodafone (New Zealand and Italy), Türk Telekom (Turkey), True Corporation (Thailand), MasOrange (Spain), and Slovak Telekom (Slovakia) are several examples that come to mind.

For these companies, continuing to pay for infrastructure and maintenance of email systems made little economic sense. Other telcos attempted to shift their business models, albeit with little success. Case examples of telcos offering monthly subscription-based or freemium-based consumer email services remain uncommon.

But why have the results been so disappointing to date?

Challenges of Monetizing Telco Email Services

Besides free email clients monopolizing the market, telcos face challenges spanning management costs, consumer preferences, regulatory pressures, and more. The top issues hindering the profitability of telco-branded consumer email services are:

• High Total Cost of Ownership (TCO): Whether it’s an on-premises deployment or a cloud-based deployment, consumer email services carry hefty costs for telcos to maintain. An ABI Research analysis found that the annual TCO per 100,000 email users can surpass US$1 million for telcos.
• Diminishing Value to Keep Each Email Account: Telco consumer email services were once useful communication channels to market to customers. Telco-branded mobile apps have since replaced email for customer outreach. Mobile apps also help avoid potential breaches of advertising regulations, as Orange experienced in December 2024. Furthermore, ABI Research estimates that only 35% of telco email users find value in the service.
• Higher Cybersecurity Standards: Cybersecurity vendor DeepStrike reports that 3.4 billion phishing emails are sent every day in 2025. Attackers are also leveraging Artificial Intelligence (AI)-based methods in 2 out of 3 attacks, according to CybelAngel. With email-based cyberattacks becoming more frequent and sophisticated, telcos do not want to deal with the risks. Without frequent investment in bolstering email security, telcos may experience increased customer dissatisfaction and face regulatory fines in the event of data breaches.
• Fewer Email Vendors Available: Telcos typically rely on commercial software licensing to develop email services. This simplified approach is increasingly challenging to use as the email software vendor market continues to contract. For example, email security vendor Cyren liquidated all its assets in 2023 due to financial difficulties. Maintaining consumer email services could prove difficult for telcos if their solution provider experiences insolvency or fails to upgrade features.
• Customer Expectation for Cutting-Edge Product Capabilities: The rise of cloud-based email platforms has resulted in fiercer competition. Telcos are going up against advanced platform providers that integrate AI into their products. This enables the Gmails and Yahoo Mails of the market to provide advanced features like writing assistants, email summary generation, and smart search functions. To keep pace, telco email service providers must continuously invest in product enhancements.
• Opportunity Costs: Generally speaking, consumer email services are an afterthought for telcos. Their main focus is on monetizing connectivity services. Therefore, the appetite to modernize email services is relatively low.

Although the discussion, so far, may suggest that telcos should abandon consumer email services, ABI Research believes there is still a viable path to monetization.

What’s the Best Path Forward for Telco Email Services?

Going forward, telco email service providers have three strategic options to choose from:

1. Continue operating telco email services in-house
2. Terminate telco email services
3. Transition telco email services to a third-party provider

1. Continue Operating Telco Email Services In-House

In this first scenario, telcos would have to continue investing in robust email features and security upgrades. The revenue potential is between none and low, and Operational Expenditure (OPEX) is high. While keeping the status quo may help retain existing customers, the Return on Investment (ROI) is no guarantee.

2. Terminate Telco Email Services

It may be tempting to simply pull the plug on consumer email services altogether to save money, but this is a risky move. Customer satisfaction will likely take a hit, leading to potential reputational damage. Even more, telcos will still incur costs to help customers migrate to an alternative email service provider.

3. Transition Telco Email Services to a Third-Party Provider

This leaves us with the third strategic option: transitioning email services to a third-party provider. It is in the opinion of ABI Research that this is the best way to maximize prior investments in telco-branded email services. Revenue can still be generated through a revenue-sharing agreement or from selling the existing email list. Telcos only have to pay for transitioning customers to the third-party email services provider. In most cases, the third-party provider will assist in the process.

In this third scenario, telcos ensure that the minority of customers who actually value email services remain happy. Moreover, the combination of reducing operating costs and short-to-mid-term ROI will be enticing to Chief Financial Officers (CFOs). Executing on this opportunity requires telcos to carefully select a reliable partner, provide a seamless transition, and clarify any branding confusion.

Table 1: Strategic Scenarios for Telco Email Service Providers

Conclusion

Let’s face it, email services are not a top priority for telcos. Today, it is mainly seen as a means of improving customer stickiness. But completely shuttering email services may negatively impact brand image and will undermine sunk costs. By transitioning telco-branded consumer email services to a reputable third-party provider, maintenance and product updates fall on someone else’s shoulders. Consequently, it enables operating cost savings, as well as potential revenue gains,

Are you a mobile operator offering email services? Download our free whitepaper, What's Next for Telco Email?, for an in-depth study of the options available for delivering services.