By Laolu Akindele
NAIROBI, Kenya, June 25 – The evolution of telcos in today’s changing world has been nothing short of remarkable. The telecommunications industry has undergone tremendous changes over the past decade as telco revenues have been under pressure due to stagnation or decline in their traditional value areas.
These changes have been fueled by evolving consumer behaviors, heavy regulation, increasing pressure from new and existing players, technology disruption, high infrastructure costs, and declining traditional revenue streams.
The COVID-19 pandemic accelerated digital transformation across various sectors, and the telco industry was a significant beneficiary as it provides the critical infrastructure that supports digital services. Consumers now rely more than ever on digital solutions, and businesses have realized that digital transformation is necessary for them to remain relevant.
Given the disruptions taking place, telcos are now evolving into technology companies and changing their business models, processes, and operating culture. Their business model is shifting into one that is customer-centric and includes the provision of diverse digital services to meet their customers’ demands.
Platform thinking and an investment in modernized infrastructure are helping telcos create modern applications. We have seen telcos adopt Agile methodology to transform their software lifecycle management process and help deliver new and relevant products and services to their customers efficiently. They are also moving from telco legacy to in-house DevOps-driven development of scalable platforms.
Telcos are now running platform businesses that offer apps, streaming, retail platforms, insurance, peer-to-peer payments, mobile money, savings, loans, remittance, ticket booking, shopping, license applications, and pension services, among others. These new digital services are designed to create new revenue streams for the telcos, attract new customers and retain the existing ones.
The use of Artificial Intelligence, Machine Learning, and Big data analytics has enabled telcos to understand their customers’ behaviors, making them more proactive in managing churn. Predictive analytics is used to provide tailored services to their customers. Data is also used to create new strategic streams through partnerships to generate revenue.
We are seeing an inclusion of a robust partner ecosystem in their digital transformation strategy. Safaricom’s ecosystem, for example, includes agents, merchants, banks, developers, banks, microfinances, integrators, aggregators, money transfer businesses, and Saccos, among others. By leveraging their strategic partnerships, Safaricom can accelerate their customer offerings and monetize their investments.
The adoption of 5G is expected to lead to intelligent connectivity. Edge cloud computing combined with 5G is expected to play a significant role in the advancement of technologies such as Artificial Intelligence, Machine Learning, Augmented Reality/Virtual Reality. This can only happen through high-speed connectivity, which 5G provides, combined with computing being brought into the network, close to the consumer (Edge computing). This will help telcos create new revenue streams through differentiated offerings.
Notably, we are seeing a focus on ESG strategies by telcos. They are increasingly using ESG measures and reporting to attract investments and to appeal to their customers and employees. Per the GSMA Mobile Net Zero publication 2022, many operators have committed to Net Zero targets by 2050 or earlier. Key initiatives they are adopting include the use of the latest technologies to boost energy efficiency, the use of renewable electricity sources, and Network equipment supplier engagement.
The evolution of telcos and the provision of relevant services to their customers require a focus on a few critical areas.
Regulatory engagement and alignment – The changes in business models, systems, and products must be done with proper regulatory engagement and alignment. Telcos must ensure regulators are appropriately sensitized and carried along to ensure regulation doesn’t hamper their growth.
Cyberthreats – As telcos embrace partnerships and adopt cloud technologies in delivering relevant services to their customers, their threat landscape increases. They should, therefore, ensure they have robust cybersecurity procedures and practices and collaborate with ecosystem partners to mitigate risks that could be introduced into their environment.
Telcos must also pay attention to data privacy, as they use data to provide tailored services. Consumer trust is crucial for telcos to reap the benefit of their investments. Proper data privacy policies and frameworks should be adopted to help minimize data privacy risks.
In conclusion, telcos’ success in evolving and providing relevant services to their customers hinges on attracting customers and partners to their network, transforming their internal operations, creating new business opportunities, managing emerging risks, and creating an IT-oriented approach and culture in running their businesses. Telcos should also incorporate ESG measures and reporting to sustain operations and optimize growth in their respective markets.
The author is an Associate Director, Risk Assurance Services, with PwC Kenya
