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As telcos team up to expand into new markets, what are the key lessons from existing joint ventures?
Telco joint ventures are on the rise
With core connectivity revenue growth proving elusive, telcos are looking to increase efficiency while expanding their offerings and generating new revenue streams. This report considers how telecom operators can create joint ventures (JVs) with each other to expand their reach, develop new propositions and break into new markets. Such ventures offer a way to spread the cost and other risks of developing and distributing new products and services across several players
This report analyses five telco JVs with five very different objectives to help gauge the scenarios in which this form of collaboration can be effective. It also makes recommendations for telcos considering entering into joint enterprises.
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Internal and external factors are driving this trend
While inter-telco JVs are not a new concept, they are appearing more frequently as the telecom industry becomes increasingly multifaceted and complex, requiring a wider range of capabilities to serve more use cases.
There have been many examples of telco JVs through time
Among the internal drivers for this trend is the fact that individual telcos are struggling to keep up with the pace of technological change. AI is changing the landscape rapidly – and most telcos have very small R&D budgets to explore new routes to efficiency and revenues. This can leave them too dependent on a small number of vendors to bring innovation. JVs can help to spread the cost and risk of telcos innovating for themselves.
Additionally, telcos may spot opportunities in sectors of the economy that may not be cost-effective for them to address with their own internal capabilities. As enterprises become dependent on highly sophisticated digital infrastructure, the provision of connectivity is becoming increasingly complex and multifaceted. Different sectors of the economy are using connectivity differently – and telcos may want to pool skills and expertise to create tailored propositions for these different sectors of the economy and diversify.
Externally, there is an emerging sense that the economy is overly dependent on a few hyperscalers. Some policymakers and enterprises are looking for a counterweight to big tech, with there are regulators pushing for greater digital and technological sovereignty. Meanwhile, enterprises are becoming more concerned about sharing sensitive data with big tech and consumers are concerned about big tech’s privacy practices. JVs are a way for telcos to overcome scale disadvantages.
Finally, JVs can be a way to address talent challenges within the telecom industry. Skilled software engineers and data analysts may prefer to join a new company without a long-standing culture and entrenched working practices. JVs can offer a startup-style culture that may appeal to people who wouldn’t ordinarily choose to work in telecom. New incentives and working practices can be tailor-made to serve the venture’s market and mandate.
Table of contents
- Executive summary
- Telco joint ventures in focus
- Case studies: Telco joint ventures
- Conclusions
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