Looking for a new business model for telecoms

The telecoms industry is including new players that are changing the landscape
María González Rodrigo is editor, CommsMEA
María González Rodrigo is editor, CommsMEA

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We are all aware that operators’ revenues have dropped globally because new players have jumped into the telecoms industry. As enablers of connectivity, operators are facing the infrastructure investment to offer these services to companies and consumers.

Each company invest in its core business, but some of these businesses are based on the internet, they need connectivity to develop their business. Aware of the need of the physical internet structure to grow their business, Internet players invested over $30 billion annually in physical networks, facilities and equipment, and nearly $100 billion between 2011 and 2013, according to a study from Analysys Mason.

These new internet players like Over The Top services (OTTs) have realised that they need to invest in the physical infrastructure. Now, how should telecoms operators change their business model?

Operators need to follow the transformation that the industry is witnessing. Investing in content companies to add value to the services that they are offering, acquiring content or media companies, partnering with OTTs or exploring new business verticals are some of the solutions that operators are testing globally.

Depending on the region and the local market, operators should follow different strategies, but there is a need for a change in the base of the telecommunications business model to maintain the growth.

According to a report from Juniper research, annual mobile operator expenditures exceed $800 billion and several leading players face the possibility of costs exceeding revenues by the end of the decade without remedial action.

The research found that margins had fallen by an average of 6.4% over a three year period, with five of those surveyed experiencing decreasing margins in every year throughout the period. Furthermore, a number of major operators now have single figure margins: with costs currently increasing at 1.5%-2% per annum, the situation is unsustainable in the longer term.

Houlin Zhao, new Secretary-General of the International Telecommunication Union) (ITU) talks about what operators should do and how they should work on an industry perspective to gather new and traditional players under the telecommunications umbrella.

We also had the chance to talk with Ahmad Al Hanandeh, Zain Jordan CEO, talking about the changes that the company is set to make to start new revenue drivers and face the taxes imposed by the Jordanian government on the telecommunications sector in 2014.

On another note, I would like to thank everyone who made possible the CommsMEA Awards. Thanks for sharing your time with us and helping us paying tribute to the players that helped to shape the telecommunications landscape. I hope you can join us next year too.

María González Rodrigo is editor, CommsMEA.

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