Case studies of telcos adopting infraco, servco, or telecom techco models, how they achieved this, and what lessons can be learnt.

Telcos must transform for future success

Traditional telcos are evolving beyond their role as basic connectivity providers. This is due to decreasing revenues, the rising demand for digital services, evolving network technologies, and the desire to leverage growing capabilities. To stay competitive and ensure future viability, telcos must transform their business models.

Our Telecoms 2030 Part 3: Pathways to servco, infraco and techco report highlights essential transformation paths for traditional telcos. To avoid becoming pure utilities, telcos must transform their core businesses into more efficient and flexible infrastructure companies (infracos), focusing on efficiency, automation, and partnerships. To accelerate growth and capture the full value of their network investments, they should build service companies (servcos), requiring strategic focus, long-term commitment, and leveraging mergers and acquisitions. Combining infraco and servco capabilities to form a telecom technology company (telecom techco) involves repurposing skills, vertical integration, and adopting a multi-cloud approach. Success in these areas demands strong senior management commitment and effective shareholder communication.

Three telecom business models

Source: STL Partners

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The journey towards a telecom techco

Telcos that have been focused on new service innovation for over a decade are beginning to look like telecom techcos and have outperformed their peers in terms of market capitalisation. Our analysis indicates that transforming into a telecom techco is the most effective strategy for capturing new growth and ensuring long-term resilience. However, it is also important to remember there is no single path to becoming a telecom techco. While this transformation may be the optimal approach overall, it may not be the best or most feasible option for every telco. There are alternative strategies that telcos can explore to achieve their objectives.

Many telcos are in the experimentation stage, identifying application areas, use cases, or implementing pilots and proofs of concept. With the rapid pace of technological advancement, telcos need to act swiftly. Time is critical for telcos on the techco journey. Acquiring essential skills and building open models and ecosystems quickly is crucial to shifting market dynamics and re-establishing telcos as focal points, avoiding missed opportunities and obsolescence.

Telcos transforming to telecom techcos aim to provide comprehensive technology solutions and applications, moving beyond just offering connectivity, storage, and processing power, with an emphasis on strong privacy and cybersecurity. To address current challenges, operators need to shift from network-centric to customer-centric operations, involving operational overhaul, cost reductions, and innovative value propositions. Key investments include 5G, IoT, edge technologies, cloud-native networking with next-generation services, and enhancing customer experience through AI and automation.

Addressing inconsistent terminology within the industry is essential, as the concept of a “techco” is frequently referenced but often discussed in different ways. However, inconsistent terminology is not the major barrier to progress. The real challenge lies in the lack of understanding of these terms, their implications, and the strategies needed to achieve the associated goals.

In this report, we examine five telco operators operators – Elisa, Swisscom, Lumen, Console Connect and TDC (functionally split into TDC Net and Nuuday) – to understand how telcos have transitioned away from traditional business models, providing examples of actions they have taken to build infraco, servco, or telecom techco businesses, and evaluating their progress along each path.

Telco transformation case studies

Source: STL Partners

Building on the insights from Telecoms 2030 Part 3: Pathways to servco, infraco and techco, this report aims to help telcos understand their goals, define a strategic direction, and comprehend what it takes to achieve them, while highlighting key lessons to be learned.

Table of contents

• Executive summary
• Introduction: Telcos must transform for future success
• Case study 1: Elisa
• Case study 2: Swisscom
• Case study 3: Lumen
• Case study 4: Console Connect
• Case study 5: TDC Net & Nuuday

Related research

• Partnering for telco growth
• Telecoms 2030 Part 3: Pathways to servco, infraco and techco
• Telco generative AI adoption tracker
• Future Skills Tracker report

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Kerina Naran

Kerina Naran

Research Analyst

Kerina is a research analyst at STL Partners and is now applying her advanced research and analytical skills from an extensive background in biomedical sciences to the dynamic telecoms and technology market. Kerina joined STL Partners after obtaining a PhD in Virology and Immunology from Imperial College London.