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Unlocking Growth Beyond Connectivity: Insights from Telco Growth 2024

What telco industry leaders think about growth beyond the core

June 28, 2024

Telcos are facing major challenges like commoditization, competition from hyperscalers, and complex management. Finding solutions and preparing for the future is essential. Here are some highlights from the industry leaders shared at the Telco Growth 2024.

Single Digit Growth, Double Digit Opportunity

By Kenechi Okeleke, Senior Director at GSMA, ex-Senior Director at Business Monitor International

We’re living in the digital era, which we mark starting from 2010 with the advent of 4G opening up new digital services. From 2010 to 2018, we observed significant revenue growth in the digital space, particularly for internet companies and OEMs. However, mobile operators, who began with a higher revenue base from voice, data, and SMS services, saw much less growth in comparison.

Entering the 2020s, operators face a challenging financial landscape. Our global forecasts show that while there will be revenue growth, it will be in the single digits. For instance, after the 2020 pandemic recovery, growth peaked at around 6% in 2021 but is expected to hover between 5% and 6% until 2025, eventually dropping to low single digits by the decade's end.

“Operators are going to record revenue growth during this period, but it's all going to be in the single digits.”

Kenechi Okeleke

GSMA

Operators are also grappling with high capital and operational expenditures. The first wave of 5G investments from 2019 to 2023 required significant capital. As we move into 5G advanced stages, further investments are imminent. Additionally, operating expenses, particularly energy costs, are substantial, with global operators expected to spend over $2 trillion this decade.

Given this financial scenario, operators must diversify their services beyond core offerings. GSMA research shows that over half of the operators surveyed view these additional services as the primary drivers of revenue growth. This diversification is not just an option; it is a necessity.

“Over half of the operators view additional services as the primary drivers of revenue growth.”

Kenechi Okeleke

GSMA

Technology advancements offer operators a tremendous opportunity to build digital services on their existing networks. Customer demand for more immersive digital experiences and enterprise digital transformation are also key drivers.

When we talk about services beyond core, we refer to a wide range of new opportunities. For enterprises, these include smart cities, metaverse, professional services, big data, drones, and cloud services. For consumers, digital payments, commerce, digital health, entertainment, education, and smart home services are emerging areas.

Since 2017, we’ve tracked the revenue contribution from these services, and it's promising. The average revenue from these services among major operators has increased from 18% in 2017 to 26% in 2022, showing positive trends across the board.

The transition from traditional telecom to digital telecom is inevitable. Operators are already on this path, and those who haven’t started must do so now.

Changing Society through Changing Telcos

By Júlio Pinho, Head of International Sales at POST Telecom, ex-Principal Wholesale Negotiator at Vodafone

Monetizing new technologies like 5G through IoT is a huge opportunity, and not just from a commercial perspective, but from a societal point of view. Local authorities, national strategies, and citizens play a crucial role in leveraging these technologies.

Connectivity remains a cornerstone in the telecom strategy, but it’s not the key source of value anymore. Telco providers are not just enablers of connectivity; the real value lies in what we build on top of it—cloud, AI, digital services, television, etc. Today’s society is hyper-connected, and we must look beyond the basics.

That’s why things like 5G are not valuable per se—they are catalysts. For example, 5G is set to be a catalyst for IoT. This convergence of mobile and fixed services is crucial, especially as we move towards smart homes, smart cities, and smart machines.

The value of new services lies not only in making a hyper-connected society but a better society as a whole. Smart concepts are about creating an impact without drastically changing user habits. For instance, with a smart home app, you can manage resources efficiently even if your routines remain the same. This digital transformation fosters responsibility and can significantly impact our communities.

“Technology as a whole will encourage a change in behavior, and the changing behavior means a change to society.”

Júlio Pinho

POST Telecom

Waste management in smart cities is a prime example of this impact. Efficient waste management not only optimizes resources but also provides a sense of accomplishment and satisfaction. IoT's true value lies in transforming data from sensors into actionable information.

The three pillars—citizens, local authorities, and businesses—must work together to bring about this change in a society through technology. Connectivity drives change, but the services built on top of it can transform our behaviors and societies. It's about being current, sustainable, and leaving a better world for future generations.

The Silent LEO Revolution

By Yves Nahas, CEO at Live Telco, ex-Group Sales Director at BT Group

Today, we’re witnessing a revolution in the telecom world brought by LEO (Low Earth Orbit) operators. While many outside and even within the industry are skeptical, LEO providers like Starlink, Kuiper, and OneWeb are set to profoundly impact telecom at all levels: enterprise, consumer, fixed, and mobile.

The emergence of reusable launchers has drastically reduced the cost and complexity of launching satellites. Traditionally, GEO stationary satellites provided expensive, high-latency services. In contrast, LEO satellites now offer super-fast internet with latencies nearing fiber speeds.

Though initial scaling issues existed, advancements have significantly improved performance. With around 6,000 satellites, Starlink plans to expand to 24,000, ensuring better service quality. Future technologies like Direct to Cell (DTC) will allow mobile phones to communicate directly with satellites, presenting a challenge to traditional telecom operators.

“A lot of operators live in denial. But some operators are super smart. They're thinking: 'What shall I do?'”

Yves Nahas

Live Telco

However, telecom operators can play a crucial role in this ecosystem. While some may deny the risk, others see the opportunity to resell LEO services or even launch their own constellations. Operators' expertise in local regulations, connectivity, and infrastructure is invaluable to LEO providers.

GEO satellites will persist, but their commercial viability is questionable. LEO's rise presents opportunities in subsea connectivity, regulatory support, and market integration. As technology evolves, operators must adapt to remain relevant and embrace the LEO revolution.

Growing Beyond Core with a Modular Approach

By Christina Frost, Chief Customer Success Officer at HeyInnovations

Imagine a mobile operator that works across countries, like Rakuten or Deutsche Telekom. They have huge digital portfolios with up to 80 different apps. Usually, every single app for a particular country or customer segment is built and supported by a dedicated team. It can get complicated and expensive to manage and innovate at the same time.

How to optimize development? The best way is to use a modular approach. With a modular approach, one team builds and supports one technical platform that serves as a base for many digital products. The platform includes multiple modules that can be customized based on design, geography, or the number of services included.

“With a modular platform, you already have a technical base and modules. You just need to customize them and wrap them in new branding.”

Christina Frost

HeyInnovations

There are two main use cases for a modular approach in Telco: customizing for different customer segments and customizing for different countries.

First—customizing for different customer segments. Imagine a mobile operator wants to target Gen Z. It’s a younger audience with specific needs, more open to new things. There's more space for creativity in design and service, so it makes sense to launch a new app for Gen Z subscribers. If the main app is standard, launching a new app from scratch takes time and effort. With a modular platform, an operator customizes modules and wraps them in new branding.

Second—customizing for different countries. Imagine a telco operator enters a new foreign market. This country has local privacy laws or payment methods. Instead of building a new app from scratch, the operator customizes the profile and payment modules to meet all the local requirements easily.

These are just a few examples applicable to telcos. Some operators have mobility services, email services, cloud storage, promotions, cybersecurity services, loyalty programs, post services, streaming services, city services, you name it. It's up to you to define the modules.

There are three key benefits of a modular approach? First, faster development—a modular approach allows the team to work on different modules simultaneously, saving up to 30% of development time. Second, easier scaling—one team builds a module once and then adapts it for new segments and regions, reducing time to market. Third, lower costs—one team can handle development and support, saving significant resources for the company.

“With a traditional approach, launching four apps would take 32 months. A modular platform cuts this time by 30% to 22 months.”

Christina Frost

HeyInnovations

The modular approach is a game-changer for telecom operators aiming to expand beyond their core markets and audiences. As the digital landscape evolves, embracing modular apps will be essential for telcos to stay competitive, deliver personalized experiences, and unlock new revenue streams.

You can read more on the modular approach to developing digital products in our Telco-to-Techco guide.

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