The word 'Digital Telco' makes one think of a sort of nirvana for all the key stakeholders of a Telecommunications company. The definition I take is of an enterprise which understands and has the trust of its consumers, its employees, suppliers/partners and assets (more on this in my next post).
Going by that definition and as things stand today, to become a Digital Telco will require massive transformations for Telcos. For anyone who has been involved in a meaningful transformation, it is obvious that this is not something which will be easy to achieve. Hence, the first question is why bother and why is this important?
Consider the following:
- Public companies traded in the US now have a one-in-three chance of not successfully surviving the next five years, as per a recent BCG perspective article
- Consolidation in mobile is creating three operators across key markets reflecting quad play (Convergence of fixed, mobile, broadband & television) and tighter regulatory oversights.
- Margin consideration from becoming a pure utility is scary for a Telco.
- According to a net margin data collated by NYU Stern, a typical general utility has a margin of 8.7% while a Telecom services company has a margin of 11.5%.
- Global telecom services revenue in 2015 according to Statista is €1140 Billion. Difference in net profit from a change from a services to a utility business could mean €32 Billion of lost margins for Telco's globally.
With the above in mind, Digital Transformation and building a vision of a Digital Telco is no longer a choice but a necessity.
To survive and to thrive in the current environment driven by consumerisation, empowered consumers, disruptive technologies and a buzzing startup ecosystem; Telcos have to embrace Digital technologies and build a version of themselves which is much more agile, customer focused and closely connected both internally & externally.
Are there other drivers which are making Digital Transformation an imperative? Let me know your thoughts.
In my next post, I would like to offer some thoughts on what I imagine a Digital Telco to be.
