As operators embark on their telco cloud journeys, what should they look out for and what lessons can they learn from others? This report analyses the strategies and progress of four operators leading the way in telco cloud transformation and sheds light on the lessons learned from their initial deployments.

Telcos are becoming more agile, scalable and geared to making their networks cloud-native

The next generation of telcos will adopt cloud-native business models, operating open and dynamic infrastructure with an organisation that reflects the same agile standards as the technology in which it operates.

For the past decade, telcos have suffered from shrinking profit margins and the increasing presence of adjacent industry competitors who, entering previously “moated” areas of telco business, are driving telcos to adopt aggressive transformation programmes. The hyperscalers represent a real threat to telcos, increasingly targeting core telco workloads and positioning themselves to secure the edge market. This imperative to transform responds to pressure to decrease costs and implement automation within the network and across all business processes, as the graph below indicates.

Capital markets are rewarding tech companies and punishing telcos

Source: STL Partners

Telcos hope to transform to achieve a far greater scale of existing services and create new revenue streams through agile development cycles similar to those seen in technology organisations and hyperscalers. This shift is partly inspired and influenced by what hyperscalers have achieved in expanding the cloud into a horizontal necessity. They can scale their infrastructure while creating a diverse ecosystem of partners within their marketplaces. This shift differs between operators depending on their geography, footprint and ambitions and is sometimes characterised as a transition from telco to techco.

Telco cloud is central to this transformative shift

As the core capability and key area of expertise, the network is a central part of this transformation. Telcos expect that transforming the network will lead to broader transformation across the organisation whilst updating the very thing which underpins their revenue model. Just as Amazon built an entirely new business (indeed a new cloud industry) on the back of infrastructure and expertise developed for its internal IT needs, telcos hope to offer new services on the back of newly acquired, distributed cloud capabilities.

As a result, much of the transformation focuses on introducing cloud practices and processes to the network, extracting the associated benefits and creating an organisation better equipped to develop additional services and products alongside connectivity. We refer to this as telco cloud.

Most telcos lack the internal skills to develop and manage their cloud-native platform, meaning they rely on partners to support this transition. Furthermore, without a solid strategic focus on learning, telcos will not meet the broader transformational goals they have set around new operating models, delivering agility at scale to compete successfully in new markets.

Table of contents

• Executive Summary
  • Four pathways to achieve telco cloud transformation
• Introduction
  • Telcos are becoming more agile, scalable and geared toward making their networks cloud-native
  • Working with an integration partner through pathway 2 enables telcos to adopt the skills and processes required to manage the platform independently in the future
  • Pathway 2 (integrating vendor-led, multivendor approach) poses significant challenges around ownership, independence and extracting the full benefit from the new operating model
  • Telcos embarking on their telco cloud journey are looking for guidance to map out a clear route to success
• Observations and recommendations from the Telco Cloud Index
  • Case study 1 (MENA)
  • Case Study 2 (Americas)
  • Case study 3 (Europe)
  • Case Study 4 (Asia)
• Conclusion
• Appendix

Related research

• Telco Cloud Deployment Tracker Q3 2023: When will the pace pick up?
• Five ways to get open RAN deployment back on track
• Telco Cloud Deployment Tracker : Is 5G SA getting real?
• The Telco Cloud Manifesto 2.0
• Telco to Techco: Six tenets for success

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