80 per cent of C-level executives from regional telcos say their success, and even survival, depends on making fundamental changes to their business and operating models, according to a recent study by A.T.Kearney and SAMENA telecommunications council.
The report has clearly revealed that telecom operators in South Asia, the Middle East, and North Africa (SAMENA) now face a significant slowdown in revenue and profitability growth. What is clear is that telecoms cannot afford to focus only on short-term steps in their transformation journey.
Globally, mobile data consumption is expected to grow 30 per cent, and fixed-line data is forecast to grow 8 per cent annually between 2016 and 2020. Yet, telecom operators face challenges to turn this increase in data consumption into additional revenue.
Operators have learned that trying to boost market share by slashing prices or offering special deals can be expensive in terms of customer lifetime value and may result in overall erosion of market value. Instead, mastering customer retention and better managing the existing customer base will become essential.
Trying to diversify and develop new businesses is not new to operators in the region, but it will take center stage by 2020, as the study finds. Developing new business is seen by 85 per cent of executives as crucial to their success.
Cost cutting will continue over the next five years as operators make capex optimisation a priority. Executives plan to further cut operational costs significantly, including network, IT, support, and overhead expenses.
Executives also hinted at possible changes in consumer and enterprise business models over the coming years. While the prepaid model is expected to continue as it is, executives anticipate launch of a hybrid model that incorporates credit cards and upfront billing. Handset credit and leasing offerings are expected to grow significantly in the SAMENA region.
Only half of executives believe data revenues can fully compensate for a decline in voice revenues. However, on an optimistic note, four out of five regional CXOs believe telecom-related IT services will drive their revenue growth. The largest potential of ICT revenue is expected in mobility, cloud, and data center services, such as telecom-related IT fields. Since establishing local capabilities for ICT solutions is still a work in progress and given that acquisitions are a faster way to achieve capabilities, it is foreseen that M&A activities in the ICT space will increase in the coming months.
As far as regulations are concerned, most CxOs feel that the regulatory environment is not adequate and expect changes in roaming and OTT .
Superior customer service is the phrase of the moment. A differentiated and superior customer experience is a top priority across operators, and most executives expect it to change significantly from today, namely toward more digital channels.
Moving forward, operators will need to focus on four important areas: customer-centric strategy, shift in operating model, embracing digital and improving skills and revisiting culture and governance.
Find the detailed report here.