Telecom Strategy

LAB7X can help you with developing winning strategies by strengthening the capabilities needed to compete successfully and acquiring new revenue channels.

Overview

The growing demand for broadband access as a means of communication is forecasted to intensely grow the number of digital customers globally. Even though the overall communications activities are sharply growing, but consumer behavior regarding traditional communication services is declining.
As of April 2017, the median age of the global population is 29.9 years old and around 52% below the age of 30. While 89.7% of people under 30 live in emerging and developing economies, particularly in the Middle East and Africa. We characterize this group as the digital consumer; which validates the consumer behavior regarding the decline of traditional communication services.
Moreover, technological advances are accelerating the threats of new substitutes into the core telco market with innovative business models and technologies, leaving many incumbents/telecoms to wonder if they can keep up.

Over-The-Top (OTT) entrants are also cannibalizing services and other technology giants are moving onto the traditional telco and media landscape. Amazon, Apple, Google, Microsoft, WhatsApp, Viber as well as pure technology companies such as Cisco, IBM, and Huawei are all growing their presence across the traditional telecom’s value chain with innovative technologies. And to add to the challenge, many large and medium-size companies whom are telecoms’ traditional customers started to build their own infrastructures. OTT players are offering core telco services such as voice or messaging, and the media space is becoming their domain.

Tech and Internet companies are also increasingly active in growth areas such as cloud space and services, competing with telecoms for clients and revenue. They are tying customers to their own ecosystems, while making reliance on traditional operators a thing of the past. Hence, digital players are systematically attacking existing telco profit pools and will continue to do so; eating up telecoms’ revenues and margins.

To remain relevant in an increasingly digital space,
telecoms are advised to consider the following:

  • Transforming the business model to optimize efficiency: it is centered on the implementation of digital in B2B, commercial, B2C, and spans all processes from marketing and sales through network all the way to customer support.
  • Move into an IT-centric and more software-driven environment: Such a move should reduce related baseline costs by 30-70 percent. It will improve time-to-market and business agility.
  • Rethink processes completely: making them digital, extremely agile, and cost efficient.
  • Focus on new business opportunities in B2B: This space is just beginning to develop. Telecoms can leverage their infrastructure advantage by combining this with state-of-the-art digital technology; for example ICT solutions, data monetization, cloud services, billings, security solutions, retailer network, healthcare infrastructure, etc. Telecoms also need to build up salesforce capabilities to start selling solutions that deliver value to customers, rather than selling individual products or services that may be more susceptible to price comparisons.
  • Analytics: Network operators can use analytics to reduce customer churn, make better marketing-spend decisions, improve collections, and optimize network design. For example, customers at risk of defecting can be identified even before they consider doing so, enabling operators to target their retention efforts, reduce spending, and maximize impact.
  • Build a scalable and modular product portfolio (Simplify): Developing scalable, repeatable and modular product portfolios is the best way to meet a wide range of customer needs in a cost-effective way. Successful telecoms aim to provide 80% of customer solutions with standard building blocks, which they complement with no more than 20% custom development.
  • Seek adjacent verticals: Add one or two growth domains to your core business such as providing branded content, financial services, lifestyle services, infrastructure, cloud services, etc. These capabilities will help reduce customer churn and to allow capturing a greater share of customers’ spending.