I recently attended the Telecoms World Middle East conference in Dubai - the land of sand, sun, sea, and very, very tall buildings! This conference drew a wide and varied audience of telco executives, vendors, and an assortment of thought leaders in this space.
I was privy to a lot of interesting discussions, and I’ve been reflecting on which challenges are facing telcos in today’s technology-dominant world.
Traditional sectors are finding themselves at a crossroads. This is especially true for the telecommunications industry, which has been grappling with a series of challenges that have disrupted its traditional business models.
Once a hotbed of innovation and high returns, the telecom sector is seeing its performance decline, delivering an average of 9% annual returns from 2019 to 2022, a point below the overall equities market. Despite this downturn, the telecom sector still plays a crucial role in global technology trends, connecting people, businesses, and societies, particularly during times of crisis like the COVID-19 pandemic.
What particularly got my wheels turning was a presentation by e&. Hatem Dowidar, Group CEO (and non-executive board member of Vodafone Group) took the stage to talk about Etisalat’s re-birth as a “bigger” entity, focused on growth through sector expansion, and other tactics beyond the usual scope of voice and data.
It was clear that e& is now treating their core telco services much like any other utility (gas, water), and instead are investing in new avenues to drive their expansion.
So, rather than have the hyperscalers make billions off the back of bandwidth, how can telcos evolve to become fully-fledged tech companies, or “technos”, and monetise that bandwidth by providing alternate solutions and experiences?
What does the future hold for the telecom industry? Here are the three key trends I witnessed at the event that are set to shape the trajectory of this sector:
Web3, often referred to as the metaverse, is predicted to transform consumer and business activities well beyond what current 5G technologies offer. e& kicked off this topic with a keynote presentation on the first day of the conference.
The competition in this space will be intense and will involve established technology companies, startups, and businesses across various industries.
How To Succeed: Telcos will need to proactively identify threats from Web3 rivals and invest in new applications that provide innovative and feature-rich Web3 uses. This means moving beyond their traditional role as network providers and becoming a key player in the Web3 ecosystem.
During the two-day event, many presentations revolved around the themes of customer experience, enabling a digital lifestyle, and digital transformation as a whole.
Ranging in age from 11-26 years old in 2023, the oldest members of Gen Z are beginning to exert their purchasing power and are redefining market expectations. This tech-savvy cohort, characterized by their preference for digitally-enabled experiences, on-demand convenience, and personalization, presents a significant opportunity for telcos.
How To Succeed: To capitalize on this opportunity, telcos need to evolve into tech companies that can meet these digital-first expectations. They must create compelling, high-quality digital experiences that cater to Gen Z's needs. For more information on how Gen Z (and their successors, the Alphas) will change retail, read our whitepaper, How to Prepare your Telco Business for Generation Z and Beyond.
The rise of big tech companies, or "hyperscalers", like Microsoft, Apple, and Amazon, poses a significant challenge for the telecom sector. As discussed by Tecnotree in their keynote near the end of day 1, these companies are stretching well beyond their original markets to encroach on territory that was traditionally occupied by telcos.
How To Succeed: To stay competitive, telcos need to harness their unique strengths, such as their extensive customer base and infrastructure assets. When these are combined with innovative tech solutions, telcos will be able to deliver value-added services that rival those offered by the hyperscalers.
I know this may seem daunting, and transitioning into a full-blown techno takes time. What do these trends mean for the average telco? And what can you do today while the techno transformation happens behind the scenes?
Here are 5 tactics that telcos can employ now without a huge shift in investment.
Telcos need a strong customer base to survive. Over time, telcos in most countries simply copy the best bits from their competition. The result? Telcos look like carbon copies of each other, just with a different brand logo. Think - when did a telco in your market truly do something different?
Who’s Doing It Right: A great example of a telco that has bucked that trend is Circles.life, a 6-year old MVNO in the beautiful city state of Singapore. Circles.life is redefining the telco subscription structure by creating flexible family plans that allow data to be passed from subscriber to subscriber within a master plan.
Circles.life has transformed the telco space with innovative products and services that are different from their main competitors (who of course are now trying to copy them, haha!). You can learn more about this offering here.
Digital experiences often need to be brought to life in a physical world. So, if you are incorporating IOT devices into your product set, be sure to bring them to life in your stores, as well as market them digitally.
If you want a reputation as a digital service provider, enable carrier billing to add these “gadgets” to your monthly subscription.
Who’s Doing It Right: Vodafone UK’s push into IOT was brought to life in stores, with products such as connected watches for children, smart dog collars, and more. This has given them a real “first mover” advantage in this space, as well as imparted their stores with an interesting feel and diversified product set.
Similarly, TELUS in Canada have a “tech heavy” retail concept that sees a plethora of fashion, home and lifestyle gadgets on display and ready to buy. It massively changes the feel and dynamic of the stores and is a great touch.
At the event, I spoke with many telcos who are frustrated with their digital penetration. They have all the apps and the channels, but customers are just not using them.
Who’s Doing It Right: Turk Telecom, with their relentless drive to ensure their digital tools are easy to use. I witnessed a superb presentation by Begüm Saraçoğlu in April at CXTMT in London. It’s clear this strategy is paying dividends in terms of their penetration and engagement.
Telcos are very slow to innovate and evolve. We’ve long talked about bringing experiences to life in retail (and digitally), but how many telcos have really done this? Often, they think a bank of TVs and some moving wallpaper will suffice. It will not.
Use sound, immersive experiences, gaming, and other tech-first solutions to bring the utility of the telco product to life. Then, when the techno journey is complete, the Gen Z customers will then be accustomed to curating a wider portfolio of products from their telecoms provider.
Who’s Doing It Right: A great example is the new retail estate by T-Mobile in the Czech Republic. They’ve curated a new retail design with no counters, no queues, an open space, and a new look and feel for the T-brand – all to create proximity with their customers.
Telcos can enable huge growth in B2B by adopting a consumer mindset in their pursuit of revenue. By making products and services into repeatable commodities, telcos can begin to plan for massive year-on-year growth as they become the de facto business provider of solutions and services long into the future.
Who’s Doing It Right: Etisalat in the UAE have launched a new digital platform called “Hello Business Hub”. This is a one-stop shop that’s designed to help clients with all the requirements of starting a business. With 12 partners on board that take care of every need, customers receive a complete array of services under one roof. These include trade licensing and registration, banking, insurance, VAT consultation, as well as office space and furniture services, connectivity, and more.
The key to the telco industry’s survival lies in embracing these three macro trends and undergoing a fundamental transformation from traditional network provider to cutting-edge tech company.
By proactively investing in Web3 applications, targeting the digital-first expectations of Gen Z, and innovating to compete with hyperscalers, telcos can not only survive, but thrive in the evolving tech landscape. This journey may be challenging, but it is an exciting one that’s filled with opportunities for growth and reinvention.