On Tuesday 6th December, STL Partners met with 17 executives from telecoms operators in SE Asia, including Singtel, Starhub, M1, Telekom Indonesia, Axiata, Bridge Alliance and Tata Communications. The group was a fairly even mix of C-Level, SVP/VP, and Strategy / ‘Heads of Digital’ roles.
The session was conducted under clear and explicit anti-trust guidelines, and had the objective to review and explore learnings in the strategic and operational transformation of telecoms business models.
Objectives of Transformation
One of STL Partners’ global observations is that all operators have different goals in the pursuit of transformation. This was also true with the group in Singapore, as shown by the following chart of a vote on the priorities assigned to different transformation objectives.
Figure 1 – Transformation priorities are different for every operator
Source: STL Partners
The subsequent discussion showed that behind these votes:
- Improving customer engagement (and customer centricity) is a fundamental goal of almost all operators
- Operators, like all businesses, want to manage costs, and this is generally a welcome benefit of change
- Most operators wish to improve the fundamental agility of their businesses – to become faster to market
- For some, creating new revenues from new services is the primary objective, while for others, it is seen as a welcome possibility once the core agility has been improved
What is the outlook for growth for telcos?
STL Partners shared findings from its recent research report Which operator growth strategies will remain viable in 2017 and beyond? that examined the growth performance of 68 operator groups globally over the last seven years.
Figure 2 – The growth performance of 68 global operator groups 2009-16
Source: STL Partners
The overall picture presented was that most telcos had enjoyed a period of good growth in this time, though latterly growth rates have slowed to an average of 2% globally. Many markets, especially in Europe, are now in decline. Voice and messaging revenues have been eroded by substitution from Internet based applications, and data competition has by and large brought strong growth in usage volumes, but not enough to make up for the declines in voice and messaging.
Can data growth ‘save the day’?
A question raised in Europe and discussed again in Asia when this analysis was presented, is whether broadband data sales can offset the declines in voice and messaging revenues. The arguments for and against this are summarised in Figure 3.
Figure 3 – The arguments for and against broadband producing long term growth
Source: STL Partners
- Executive Summary
- Objectives of Transformation
- What is the outlook for growth for telcos?
- Can data growth ‘save the day’?
- Why is transformation so difficult?
- The challenge of achieving synergy with the core
- So ‘going digital’ is becoming a necessity whatever your strategy
- Opportunities for ‘Telco Cloud’ Centred Growth
- Models for how to transform
- The Publisher / Utility Model
- 20 transformation metrics that matter
- Digital Maturity Model
- NFV/SDN Playbook
- Case Studies of Transformation in Practice
- Telkom Indonesia – Becoming the “King of Digital”
- Celcom Axiata – Quick ‘HITx’ to Kick-start Transformation
- Conclusion: how to change model and culture together?
- 1. Establish transformational leadership and vision
- 2. Empower and motivate people to unlock culture
- 3. See success through a new lens (and new metrics)
- 4. Re-engineer the guts of the business
- Figure 1 – Transformation priorities are different for every operator
- Figure 2 – The growth performance of 68 global operator groups 2009-16
- Figure 3 – The arguments for and against broadband producing long term growth
- Figure 4 – A clear majority in the group believed broadband will not sustain long-term growth
- Figure 5 – Telco ‘digital’ plays have experienced varied success to date
- Figure 6 – Telco Cloud services by type
- Figure 7 – NTT Docomo is one leading benchmark for new revenue creation
- Figure 8 – The ‘Utility’ and ‘Publisher’ Models
- Figure 9 – A high level Digital Maturity Model
- Figure 10 – The NFV/SDN ‘Playbook’ explained
- Figure 11 – Telkom Indonesia’s ‘Digital Telco’ vision
- Figure 12 – Telkom Indonesia’s Transformation Key Success Factors and Lessons
- Figure 13 – How the HITx programme was delivered
- Figure 14 – Which area of transformation has the greatest value, and what requires the greatest effort?
- Figure 15 – A new business ‘stack’ for telcos?