Telecom KPIs: What do they say about the industry
STL Partners investigates the strategic objectives and associated metrics telcos report on: Do telcos still reference the same performance metrics? Or are they reflecting industry change? How are telcos taking stakeholders with them on their change journeys?
Telecom KPIs in transition
Telcos are under pressure as 5G, cloud, changing customer needs and new competition reshape their industry. Talk of transformation has been rife amongst operators looking to take advantage of change in pursuit of growth from new areas.
In December 2022, STL Partners examined the annual reports and investor presentations of the ten operators shown in Figure 1. We wanted to see how change was manifesting in their strategic objectives and the metrics by which they publicly hold themselves to account, and if these metrics reflected their changing priorities or remained focussed on traditional business.
Figure 1: Ten operators examined by STL Partners
Themes in strategic objectives
As shown in Figure 2, our analysis revealed that strategic objectives generally fell into one of two categories; those that were defensive of the core business and those that were more progressive, demonstrating how the operator was developing beyond the core.
- Defensive objectives – focused on the telco’s financial wellbeing, improving infrastructure and increasing the base for core connectivity services.
- Progressive objectives – focused on building revenue streams beyond connectivity, building internal capabilities and improving the customer and employee experience.
The telcos also had strategic objectives in the environmental, social, and corporate governance (ESG) category, reflecting the importance of more responsible practices for the industry as a whole.
Figure 2: Themes in strategic objectives
Source: STL Partners
Defensive objectives and associated KPIs
It is to be expected that telcos report on their core business to their shareholders and external stakeholders, and that they will continue to do so. Telecom performance indicators and objectives regarding their connectivity business fall into three main areas (see Figure 3).
Figure 3: Defensive themes
Source: STL Partners
Eight of the telcos we studied had an objective relating to their financial performance, demonstrating to stakeholders that they were intent on financial prudence and generating returns.
Objectives regarding efficiency were particularly pronounced, and while profitability was mentioned, in terms of associated telecom metrics, operators seem to be reliant on cost reductions as a way to improve profitability.
AT&T’s strategic objective to be “effective and efficient in everything we do: Increasing profitability, reinvesting for growth” is a case in point. The headline metrics associated with this objective include reduced square footage of real estate and reduction in data centres, as well as run rate cost savings. Growing net additions and reducing churn in post-pay customers was one of the few direct nods to improved revenues, but it did highlight investment intentions in 5G and fibre as growth opportunities (metrics in these areas are covered in the section below, Growing the base for connectivity).
KPN’s objective to “simplify and streamline its operating model” was associated with reducing indirect costs. Telia had an intention to “ensure financial stability” and highlights reducing leverage on the balance sheet and retiring legacy systems among its KPIs (two further operators had intentions to reduce legacy). Singtel had an objective regarding “active capital management”, and TELUS highlighted a focus on efficient operation (concentrating resources on core business).
Rakuten publicised metrics relating to its financial wellbeing (reducing capex and opex, improving operating profit per full-time employee), but these were not attached to specific strategic objectives in this space.
Requiring significant capital investment, network infrastructure is another area where telcos are communicating their ambitions. All ten telcos mentioned strategic objectives in this area, whether it was to extend coverage or improve network performance, or both.
While objectives typically mentioned “build and scale” networks generically, some of the ten telcos had metrics focused on 5G and/or fibre infrastructure specifically. As seen at AT&T, these are considered to be growth areas – and key to future-proofing the connectivity business.
AT&T, TELUS, Rakuten, Telstra and Deutsche Telekom had metrics associated with expansion of the mobile network as a whole (“square miles covered by network assets”, “population coverage”, “number of cities with access”, “number of towers”).
The 5G-focused telcos (KPN, Spark NZ, Telia and Jio) reported metrics like “5G population coverage”, “number of locations where 5G is live” and “number of sites that are 5G ready”.
The five telcos (AT&T, KPN, Jio, Telstra and Deutsche Telekom) where fibre was a priority included metrics like “number of customer locations/homes with fibre coverage”, “fibre population coverage” and “number of kilometres of fibre optic lines”.
Network buildouts supported maintenance and growth of the customer base and ability to deliver new services.
Telcos regarded network performance as key to competitive differentiation, hence this was a focus in the strategic objectives of seven telcos. Illustrations of these ambitions included to “be the best broadband provider” (AT&T), “leverage and expand our superior network” (KPN), “continuously improve the network” (Jio) and “provide the leading network…” (Telstra).
The telecom performance indicators that operators relied on to illustrate their network performance included the results of third-party network tests (e.g., for “speed” and “reliability”), “average maximum download speed over the year”, “upload speed”, “growth in network capacity” and “best network” awards. Some operators were more focused on one or other of their mobile or fixed networks in terms of the metrics they communicated to stakeholders.
Core connectivity services
Eight telcos had strategic objectives tied to the growth of their core connectivity services, for example “Accelerate to grow: Grow and strengthen customer footprint” (KPN), “Focus relentlessly on growth markets of data, IP and wireless” (TELUS). Spark NZ and Telstra were the only two operators that did not have objectives that were overtly focused on growing core business, tending instead to favour objectives that focused on improving experiences for existing core business customers.
Some telcos reported top-level metrics (“stable to growing customer base”, “number of connected devices”, “number of customers using the network”), while others referenced growth in particular segments (e.g. enterprise, SMEs, mass market) or business lines (fibre, 5G).
Service cross-holding was also being tracked, e.g. “the number of customers taking more than one service” (Telia), “the number of customers for MagentaEINS” (Deutsche Telekom’s converged fixed/mobile service).
Few telcos mentioned average revenue per user (ARPU) or usage metrics directly.
ESG objectives and associated KPIs
All the telcos had objectives and/or KPIs related to sustainability and the environment (Figure 4). Seven telcos reported social responsibility objectives.
Figure 4: ESG themes
Source: STL Partners
Examples of strategic objectives related to environmental sustainability included Telia’s strategic objective “Delivering sustainably: Securing execution excellence” and KPN’s plan to “Connect the Netherlands to a sustainable future”.
Publicly shared telecom metrics included progress towards carbon neutrality and reductions in greenhouse gas emissions, ratings on ESG performance by third parties (e.g. EcoVadis), device refurbishment and making the shift to renewable energy sources.
The seven operators that emphasised social responsibility objectives did so in relation to employees and/or the wider society.
From a societal perspective, Telia had the strategic objective “Connecting everyone: Driving digital inclusion”. Telstra’s objective “Being a responsible business” had an associated metric around support for vulnerable customers. TELUS’s objectives included “Making the world a better place” and “Making stronger, healthier communities”, which translate into metrics around volunteer work and charitable efforts.
Singtel’s objective to “Champion sustainability and people: advancing diversity, equity and inclusion” is associated with performance indicators such as the “percentage of staff and management that are women”. KPN, Rakuten and Spark NZ also reported telecom metrics related to gender representation. Additionally, Spark sought to understand ethnic representation.
Figure 5 summarises the distribution of defensive and ESG themes.
Figure 5: Distribution of defensive and ESG themes
Source: STL Partners
Progressive objectives and associated KPIs
Some telcos were more open than others in terms of communicating how they were transforming their business for the future. These telcos publicly shared objectives and metrics in one or more of the four areas shown in Figure 6.
Figure 6: Progressive themes
Source: STL Partners
Revenue beyond connectivity
Six telcos specifically expressed strategic objectives and telecom metrics related to generating revenue away from core connectivity services. Most were associated with the extension of existing adjacent businesses, with little relation to genuine innovation.
These six telcos had existing adjacent services that they were looking to grow. They were tracking metrics including the number of customers the adjacent service attracted, growth rates and product/service crossholding. For example, TELUS shared metrics relating to security and automation services, which fall under its home services (alongside connectivity) – but additionally it reported on its separate health and agriculture businesses (e.g. the number of new virtual care customers, the number of countries where TELUS has agriculture customers).
ICT services were an area of interest for Deutsche Telekom and Singtel, with both reporting KPIs in this area. Additionally, Singtel was looking to expand digibank into the region and AT&T was focused on growing HBO (pay tv and streaming services) to expand customer relationships.
Rakuten Mobile and Reliance Jio both had objectives that emphasised the creation of synergies between the different business segments of their conglomerate parents. For example, Rakuten reported a metric of the average number of users who spend on Rakuten Ichiba (its online retail business) after signing up for mobile services.
TELUS and Rakuten came closest to sharing innovation objectives: TELUS wanted to provide “integrated solutions that differentiate from competitors”, while Rakuten wanted to “be recognised as a company that promotes innovation”. Although Singtel had ambitions to “develop new growth engines” this was not clearly reflected in the metrics disclosed to stakeholders.
Building internal capabilities
This theme arose at seven telcos. The objectives and telecom performance indicators here were not just about streamlining operations to provide efficiencies, but rather indications of the operator’s intent to build flexibility and speed into its systems and working practices in order to address future needs.
Four telcos had objectives and/or metrics in this area. Examples of strategic objectives included Telstra’s to “Provide the leading network and technology solutions that deliver the future” and Deutsche Telekom’s “Simplify, digitalise, accelerate and act responsibly”. KPIs that telcos are reporting included Telstra’s 100% API-first architecture for customer management, product development and external monetisation, Spark’s percentage of customer household needs to be predicted by data and AI, Deutsche Telekom’s employee roll out of Magenta View (single view of customer platform) and Telia’s percentage increase in intelligent automation.
These telcos were open with stakeholders about the steps that they are taking to transform the organisation’s tool sets. Operators like Rakuten and Jio did not share such objectives and metrics. This could be because they have more modern operations.
Five telcos had objectives or performance indicators focused on process improvements – in most cases, the same telcos that also highlighted technology improvements. Telia, Spark NZ and Telstra had metrics related to agile working. Telstra and Spark were focused on improving their agile maturity scores, while Telia emphasised “the percentage of the workforce capacity delivered through SAFe® and agile methodologies”.
Telstra had an additional metric regarding improved time-to-market for products and services. Similarly, KPN had KPIs focused on speeding up fibre rollouts (aligned to its strategic objective to “simplify and streamline its operating model) and Deutsche Telekom was reducing time-to-market for new software/software-driven products (aligned to its “simplifying, digitalising and acting responsibly” objective).
Some telcos were improving internal capabilities via recruitment and/or upskilling initiatives. Four telcos communicated metrics in this space. Singtel focused on training under the umbrella of its strategic objective to “champion sustainability and people: building a future-ready workforce”. It tracked metrics like training hours and training investment. On the recruitment front, Singtel reported on the number of new hires in “tech-related roles”.
Telstra had ambitions to “increase the representation of data and analytics in its workforce” and to ensure a “direct software engineering workforce that is delivering double the percentage of strategic development work” by FY25. Deutsche Telekom tracked employee sign-ups to training on topics such as big data, digital marketing, AI or software development. Telia was looking to “enable a digital workforce via critical skills in-sourcing and growth in data users”.
Improving customer experience
Six telcos (KPN, Telstra, Spark NZ, Rakuten, AT&T and Telia) had objectives that could be deemed customer experienced focused. Most were targeting customer satisfaction at a high level, e.g. AT&T’s objective to “Grow customer relationships” is associated with a customer satisfaction score, as is Rakuten’s aim to “Succeed in Japan as a mobile carrier”.
Telstra and Spark NZ were more specific regarding the drivers of customer experience improvements and how they would leverage technology and digital services in this regard. Telstra’s objective to “Radically simplify product offerings, eliminate customer pain points, and create all digital experiences” was associated with metrics such as increasing the number of active app users and growth in sales through digital channels (among others). Similarly, Spark’s objective “Creating value for customers: Enabling customers to realise the benefits of digital technology and enabling their own value creation” was translated into metrics such as the number of users and interactions with a new app, and the percentage increase in customer journeys taken digitally for sales and services. Additionally, Spark focuses on interaction Net Promoter Scores (iNPS) and targets a decline in the number of customer complaints and queries.
Improving employee experience
Six telcos (KPN, Singtel, Telstra, Spark, Deutsche Telekom and Telia) were open about their intention to improve the employee experience. KPN, Telstra and Telia highlighted employee engagement as a key metric for them, while Spark NZ favoured an employee net promoter score. Singtel had a metric related to the mental well-being of its workforce, while Deutsche Telekom wanted employees to feel that digital tools support their work.
Singtel, Spark and Telstra specifically signalled the importance of their employees in their objectives: Singtel as the “champion of people: advancing diversity, equity and inclusion”, Spark “creating value for its people” and Telstra being “the place you want to work”. This could be part of a more overt strategy to attract and retain talent.
Figure 7 summarises the distribution of progressive themes.
Figure 7: Distribution of progressive themes
Source: STL Partners
Conclusions on Telecom KPIs
So, are telco objectives and metrics reflecting a change in priorities? The answer is both, yes and no:
- Telecoms metrics and objectives that operators share with external stakeholders continue to focus on traditional defensive themes, with three or four of the four defensive themes quoted at eight telcos (exceptions are Reliance Jio and Telstra). This reflects the need for telcos to protect their core business.
- ESG metrics are reported for all the telcos, indicating their elevated importance to organisations going forward.
- Six operators had objectives or metrics that focused on revenue beyond the core. Most of these related to the extension of existing adjacencies rather than innovation initiatives.
- Progressive themes were more prevalent at four operators (Telia, Deutsche Telecom, Telstra, Spark NZ). These telcos are more open about how they are future-proofing their organisations, rather than their ambitions in relation to new and different areas. The reverse is true for challenger telcos, Rakuten and Reliance Jio who did not have many ambitions for organisational improvements, possibly because they are more modern organisations.
External and internal communication of objectives and telecom metrics adds weight to the level of organisational commitment to change. By openly measuring progress, telcos can look forward to better buy-in and collaboration from those involved in the change. As the saying goes – if you cannot measure it, you cannot improve it.