Telcos - themetaeconomist

Digitisation of Telcos

29 October 2022


Digital transformation has become a top priority for telco firms the world over as they race to become digital service and experience providers. In fact, Telcos rank second within the sectors expecting moderate to large digital disruption over the coming months, according to a survey. The classic Telco services consisting of voice, messaging and data services has eroded. Competition from alternative providers, such as over-the-top (OTT) suppliers, is putting pressure to embrace newer technologies and experiment with business models in order to serve a more digitally savvy customer and maintain a healthy profit margin. With the advent of 5G, there’s a huge opportunity for Telco to accelerate their business via digital transformation which can be catapult them to the zenith of success! 


In the past five years, the Telco business has entered a period of slow decline, with revenue growth down from 4.5% to 4%, EBITDA margins down from 25% to 17%, and cash-flow margins down from 15.6% to 8%. However, digitization is not simply a threat; it additionally offers Telco an opportunity to rebuild their market positions and create innovative offerings for customers. 

So how can Telcos bridge this gap? Let’s look at few means to enable such transformation – 

Today’s shoppers have multiple channel interactions with a Telco (app, website, WhatsApp, store, email, call centre, social pages etc all), thus shoppers are true hoppers now! Its need of the hour to understand these customer journeys for a Telco that allows them to augment personalised offerings to their customers. This means providing rich omnichannel experiences that can service customers at any time and across any channel will be a key to success. Alongside it is seen that digitisation can extend revenues by 30 percent and cut back traditional prices by a similar chunk!

For Telcos, investing in e-care can reduce opex by 25 to 30 percent and a similar amount increase in customer satisfaction. Telcos ought to invest in effective customer experience (cx) systems like CDP (customer data platform) built with AI and MLOps to decipher customers’ digital footprints, 360 degree customer view, reduce costs and boost customer experience.


It is also imperative that with such new technologies within the fold of digitisation, one will need new technology and business capabilities for which upskilling the team with necessary skills in cloud, automation, AI, MLOps, DevOps, Blockchain etc, forged with the strong urge to deliver the best customer experience KPIs will be key. There are hardly any second chances when it comes to the demanding and competitive landscape we have today. 

As Telcos undergo digitisation or digital transformation, they transform from traditional communications services providers (CSPs) to digital experience providers (DXPs). The core network will always be the essential backbone asset but they will be run and managed by digital technologies as we see with software-defined networks (SDN) or further ahead cloud-defined networks with thousands of well-defined APIs seamlessly processing sales to services processes. The majority of Telcos will face a challenge while streamlining their multi-vendor application landscape for standardizing and automating their IT infrastructure while competing against nimble digital rivals in the ecosystem. In the near term as part of this digitisation Telcos would like to enable cloud transformation which means, moving datacentre workloads and API workflows to the cloud, agile software development, DevOps, cloud platforms, blockchain, co-creating solutions with specialized partners and maybe plan joint go-to-market. In the future, it will be to drive co-innovation with such specialised partners leveraging 5G, artificial intelligence (AI) etc. Telcos are scooping up millions of customers per month coupled with the ability to automate capacity, seamless API governance, server throughput, and storage has allowed their teams to specialize in business growth rather than scrambling to augment their IT infrastructure.


Lastly but one of the most important one is as Steve Jobs had said, “You have to start with the customer experience and work backwards on technology, not the other way around”. Most Telcos consider customer experience as a series of touchpoints however, this misses the crucial part of the picture: the customer’s holistic experience of the Telco. Only by walking in the customer’s shoes along the entire customer journey from beginning to end can Telcos truly understand how to gear up their performance. What would an exemplary journey feel like for the customer? What processes would brace it? How would they intersect with social, mobile, and cloud technologies? The goal is not to complicate multiple elements but to deliver a better customer experience! 

Making sensible use of digital technologies across the whole business is essential for Telcos that want not only to combat the declining growth but also to seize opportunities that could make them stronger and more profitable than before!

Research: McKinsey, The Record

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