In the continuing cycle of network, service and comm tech revolution, telecom operators play a pivotal role in helping consumers, companies and cities meet the ever-growing demand for data connectivity. Many operators face challenging economics and increased competition from over-the-top and tech players, and rollout of 5G requires major infrastructure investments. From being the undisputed core of the comms ecosystem, where do telecom operators now sit?
Globally, operators face capex scarcity, making it challenging to maximize ROI and shareholder value; yet shorter technology cycles and fast-moving challengers are driving unprecedented capex pressures on network and IT infrastructure. Internal cash flows are not enough to fund investments. Leverages are at an all-time high: an average of 15 to 16 percent of sales at the world’s top 30 integrated operators, and rising steadily over the past four years. What are the key business and tech strategies that over time will separate the winners from the losers?
Despite the huge capital investments made by operators to keep pace with successive waves of new technology over the past decade, their core business has become increasingly commoditized and growth has slowed. Instead, most of the value created in the industry has been captured by so-called edge players—those manufacturing handsets, developing apps, building infrastructure, or providing streaming or other digital services. How therefore can telcos create a cutting-edge point of difference in their adoption and deployment of upcoming technologies?
Telecom operators are likely to invest $1.1 trillion in their networks globally in the next 5 years. Even more startling, a recent PwC survey indicates that telecoms operators could be wasting up to $65 billion a year in capex. How therefore can the industry read key trends in future demand correctly to avoid waste on that (estimated) scale?
Telecom operators own a variety of assets, including data and power transmission lines, passive telecom infrastructure, active telecom equipment, core and edge data centers, and they have adopted a number of different business and delivery models. Again, what works and what belongs to a past era?
At Interconnect World, we will focus on these key issues that will shape the future of our digital economy.