Telecommunications

Global industry agenda


The telecommunications industry
is at an inflection point.

Without reinvention, the next few years could bring flat or declining revenues. Strong growth requires communications service providers (CSPs) to deliver high quality digital customer experiences, embrace agile service delivery, dramatically reduce costs and invest in new value creation strategies.

Disruptive forces

Powerful global forces outside the control of any one company are compelling rapid change for telecommunication providers.


Digital technologies

Redefining possibilities in the telecommunications industry, digital technologies will compound disruption and have hyper-exponential impact.


Mobile icon

5G

Moble icon

5G

  • The industry is estimated to spend USD 225B on 5G between 2019 and 2025 18
  • 5G-based fixed wireless access (FWA) subscription revenue will grow from USD 1B in 2019 to USD 40B by 2025 19

AI icon

Artificial intelligence

AI icon

Artificial intelligence

  • 72% of CSP outperformers in IBM's C-suite study anticipate a significant impact from cognitive technologies in the next few years 20
  • Vodafone resolves more than 70% of inquiries with its TOBi AI chatbot 21

API icon

Edge computing

API icon

Edge computing

  • Processing data locally can lower network traffic and reduces latency 22
  • 5.6 billion Internet of Things devices will use edge computing for data processing in 2020 23

Cloud icon

Hybrid cloud

Cloud icon

Hybrid cloud

  • Cloud adopters in communications experience an average 37% reduction in total cost of ownership (TCO) 24
  • The hybrid cloud market is slated to grow to USD 92B in 2021 from USD 33B in 2016 25

IoT icon

New chipset technology

IoT icon

New chipset technology

  • New GPS chips improve geolocation accuracy and lower battery drain 26
  • This caters to the rise in IoT devices and wearables that require pinpoint location 27

Blockchain icon

Blockchain

Blockchain icon

Blockchain

  • 36% of CSP organizations are already considering or actively engaged with blockchains 28
  • Telecom fraud was close to USD 40B in 2017. Blockchain can at least reduce roaming and identity fraud 29

Emerging consequences

Each manifestation of disruptive forces has the ability to shape a new future and affect the customer, the enterprise and the market.


Number 1 graphic

Customer impacts

Losing the battle for
customer relationships

Losing the battle for customer relationships


  • Consumers care more about apps and devices than connectivity than ever
    OTT players have taken over the relationship completely as their services are more appealing to consumers than just connectivity 30, 31

  • CSPs are not seen as innovators
    Device manufacturers, app providers, global search, commerce and ad platforms, and social network providers are seen as the innovators, not the CSP 32

Number 3 graphic

Enterprise impacts

Shareholders less
enthusiastic to invest

Shareholders less enthusiastic to invest


  • Overall, total shareholder returns have gone down in the last 5-10 years,
    and the sector is performing poorly – even below utility players
    In recent years, telecom enterprise value/EBITDA ratios have fallen to 6-7
    while utility margins range from 11-14
    36

  • Revenue from data is not keeping pace with lost legacy revenues, leading to modest
    or negative overall revenue growth
    From 5% growth witnessed in 2014 (YoY), mobile revenues in the U.S. market grew by 1.7% in 2015 and by a mere 0.1% in 2016 37

Number 5 graphic

Market impacts

CSPs are losing the battle for platforms

CSPs are losing the battle for platforms


  • Telecoms lack the speed to transform themselves as digital and platform players to beat the competition
    Digital transformation among CSPs is not going as fast as they would like, with culture and lack of communications the primary culprits 40

  • The cash position of CSPs is much less favorable than that of OTT companies
    Apple, Google and Microsoft are hoarding USD 464 billion in cash. And the capital intensity of OTTs is much lower, 6% CAPEX/revenue for global OTTs versus 17% for CSPs 41, 42

Number 2 graphic

Providing a good
customer experience
is challenging

Providing a good customer experience is challenging


  • Call center interactions are generally not enjoyable
    Only 16% of CSP customers say their telecom provider gives them outstanding customer service 36

  • The experience with network services leaves much to be desired
    64% of consumers have regularly or often experienced buffering problems when watching video on their mobile and in particular blame their operator. Two-thirds of consumers won’t wait more than 15 seconds for a video to start. 37
Number 4 graphic

Industry consolidation
is not paying off

Industry consolidation is not paying off


  • Global CSPs have hardly benefited from synergies from mergers and acquisitions
    Only 27% of global CSP executives believe their organization is successful in realizing economies of scale 38

  • Lack of synergies halts European telecom consolidation
    Europe's telecoms operators are no longer looking at cross-border mergers and acquisitions because the rationale for such deals simply isn't there. There are only very limited synergies. 39

Number 6 graphic

Skillsets are not transforming fast enough

Skillsets are not transforming fast enough


  • People skills have overtaken regulatory aspects as the key concern
    64% of CSPs think talent will be a key influencer on their enterprise in the
    next 2-3 years
    43

  • Digital talent is threatening to become the major bottleneck of digitization in the
    telecom industry
    Operators say limited employee skillsets is the second largest barrier to software-defined network (SDN) adoption 44

Pressing challenges

Acknowledge and act upon industry challenges
in the near term to stay competitive.


Customer demand for superior ubiquitous experiences across connectivity, content and services

Customer demand for superior ubiquitous experiences across connectivity, content and services


  • Reduction of undifferentiated assets and adoption of new technologies and processes

  • Content will be driven by personalization and understanding of human expressions

  • Interactions will be automated with AI for customer services

Digitalization and automation to reduce cost, accelerate service delivery and foster innovation

Learn more

Digitalization and automation to reduce cost, accelerate service delivery and foster innovation


  • Flexible processes and systems that can be easily reconfigured to deliver services at a lower cost

  • AI and automation to help enable reliable, efficient and secure networks, data and processes

  • Workforce profile emphasizing agile, digital and cloud competencies

Platforms and ecosystems for expansion into
new addressable markets

Learn more

Platforms and ecosystems for expansion into new addressable markets


  • Emerging architectures and programming models allow the creation of new service platforms

  • 5G will allow for trailblazing into new domains for consumers – such as connected cars and homes, health and augmented reality (AR)/virtual reality (VR) – and enterprises – such as IOT, cloud and information and communication technologies (ICT)

Transformational opportunities

Technology-enabled opportunities empower your organization to address pressing challenges and compete in the marketplace.


Become the
Digital Services
Provider of
choice

Learn more

Become the Digital Services Provider of choice


Create a 100% digital, end-to-end service creation, delivery, usage and care platform

Share or sell all undifferentiated assets, adopt cloud and virtualization, and make all processes digital and cognitive

Reinvent the company for agile service delivery and dramatic cost reduction

Learn more

Reinvent the company for agile service delivery and dramatic cost reduction


Accelerate conversion to cloud-based networks, processes and systems embracing AI, robotics, open source and security to unleash new agile services

Embrace processes transformation with over-the-top solutions, and reskill workforce and decision-making via agile approaches

Redefine industry position by investing in new value creation strategies

Learn more

Redefine industry position by investing in new value creation strategies


  • Leverage industry platforms, media, ad tech, IoT and blockchain to create new services and applications that add value to industry verticals

  • Orchestrate inclusive ecosystems and marketplaces of enterprise products and frenemies to drive new value capture models

Start here to assess your readiness for
the future

Critical question 1

Customer experiences

  • How does your company surprise and delight customers? Is your NPS world class?
  • Have you created compelling and personalized experiences for customers? Have your initiatives delivered?

Critical question 2

Transformation initiatives

  • What have you done to drive transformation across your organization – for example by using infrastructure, process, systems, skills and culture?
  • In what ways are your network and IT organizations driving new technologies to create new revenue and accelerate radical cost reduction?

Critical question 3

Ecosystem strategy

  • What are your distinctive assets – not just the “we have them too” ones? How are you investing in the former and starving the latter?
  • How are you driving growth by partnering in digital ecosystems? Where are your early successes and fast failures?

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