Mumbai, NFAPost: Telcom companies across the globe need to adopt new services and reconfigure their assets to push growth, states a new report published by Boston-headquartered international management consulting firm Arthur D. Little.
Arthur D. Little (ADL) in its new report on the global telecommunications industry has identified key strategies to derive the value of network assets, diversify product offerings and succeed in a 5G world.
The report titled “Time to accelerate growth” is based on a global survey of over 100 C-level executives. It lays out how telecom firms (telcos) can overcome challenges of high data-traffic demands while moving beyond traditional connectivity and legacy services.
The report identifies three main focus for telcos that can help them build strategies to efficiently use their network assets, improve customer experience with expanding offerings and leveraging 5G for monetization.
5G experience
According to the report, telecom and media companies need to form alliances to improve customer experience. The report states that such partnerships should use 5G to create new and compelling consumer products.
For example, premium services should combine content, experience and devices in new ways. For B2B customers, telcos should look beyond connectivity. They should include offerings of mobile private networks and network slicing, which are key for 5G monetisation.
Telcom companies for wholesale infrastructure business opportunities should also consider split business into two units. One unit manages consumers and commercial operations or ComCo and the other operates the network or NetCo.
Core services
While telcos have tried to diversify their offerings in the past decades, but they hadn’t much success on the ROI front. Given this scenario, the report urges telcos to look at various “beyond core” options. It has identified four main priorities for telcos to help them move beyond core services.
- Target a market that offers both sizable growth and revenues.
- Build a multi-model approach that combines both internal and external resources.
- Work with a “startup” mindset and in private equity mode.
- Adopt a phased and agile approach for roll-out that sequentially prioritizes key concepts.
While asset reconfiguration is not new, the report highlights a growing tranche of opportunities that telcos should consider. For example, the TowerCo model promises further options for monetization.
Value creation
Asset reconfiguration can drive value creation by lifting financing constraints, increasing asset utilisation, de-risking investment, strengthening the wholesale value proposition, increasing management focus on distinct core businesses, and preempting unfavourable regulatory decisions.
“A widening gap between revenue and investment means that the pressure on telcos’ cash flow has never been so intense,” said Karim Taga, Managing Partner in ADL’s TIME (Telecommunications, Information Technology, Media & Electronics) Practice.
“Executives must deliver growth while juggling both increasing capex and investors’ unwillingness to cut back dividends. And the Covid-19 pandemic has certainly not helped matters,” added Taga.
However, in Taga’s opinion, the telecoms industry still has a bright future ahead if it is willing to embrace the opportunities that exist and move beyond its traditional comfort zone.
“We hope that this latest edition of our flagship report provides both inspiration and guidance for executives currently strategizing ways to move their company forward,” he noted.
As Indian telecom operators enter the 5G arena, a monetization roadmap will be critical, according to Barnik Chitran Maitra, Managing Partner and CEO – ADL India and South Asia.
“This will require compelling 5G-enabled products and services complemented by new asset and service revenue streams. All are key to returning to profitable growth after a period of declining revenues and profits for the industry,” said Maitra.
(With inputs from Tech Herald)
