Telco Deep Dive: Sharing, not taking away telco lunch

• Despite predictions, mobile network operators have dealt well with threat of OTT
• Telco revenue pie shared with new players rather than eaten up by disruptors

EVERYONE loves a David vs Goliath story and over the past decade one of the favourites has been about how over the top (OTT) services were going to eat the lunch of the incumbent mobile operators. Everyone assumed mobile operators were going to be rooted in inaction, like a deer caught in the headlights of an onrushing car.

But that was naive thinking. You don’t get to be a multi-billion revenue business by sticking to one business model. Plus the telcos are already a battle hardened group from competing with each other. And while the biggest knock against celcos, as the mobile telco players are called, was their supposedly rigid engineering cultures that was resistant to change, we know now that this assumption is wrong. Because, lo and behold, every telco globally has declared their intention to embrace the culture of their attackers – the nimble, innovative, bold startups.

Any listed telco that aims to keep investors calm about the digital disruption onslaught they are facing, has already declared their intention to become a digital company themselves as they adapt and transform and evolve their cultures.

DNA readers would be familiar with this as we have interviewed and written about the three Malaysian based listed telcos and their digital intentions as well. Infact, one of those CEO’s was Sigve Brekke who I interviewed in 2013 when he was running Telenor Group’s Asia operations and sat on the board of Digi. Sigve of course has since gone on to become the President and CEO of the Telenor Group.

And in a brief conversation I had with him in 2016 he emphasized again this move to becoming a digital player but refined the message to the telco not becoming an internet company as much as a digital services company and using a “burning platform mentality” to change the company.

He also spoke about the need to get very close to the customer through offering them services and products relevant in a digital era. And you can see that from how the telcos in Malaysia are offering more digital based services and this can range from how Digi and Celcom are positioning themselves to be the preferred network choice for gamers who wish to enjoy their games on the go and through their mobiles. While on the corporate side, you see the likes of Digi and Maxis offering their Internet of Things (IoT) services as well.

And actually telcos are in pole position to offer their customer base digital services that the base is increasingly shifting to. That is why, emerging market video service, iflix, was able to partner with 27 telcos and counting, which have bundled its service as part of their value proposition. No surprise that, iflix, which just announced a fresh round of US$133 million considers the telcos a key partner as it roles out its services. Imagine that, an OTT player considering the telcos as a key partner and vice versa.

This sharing of revenue is happening in the world of enterprise messaging as well where a senior executive of global messaging leader, Infobip from Croatia, recalls how he was being warned that the OTT messaging apps were going to wipe away the margins and business of players like him. So, what happened?

The OTT players have started using the SMS service offered by enterprise messaging players to send customers their one-time activation pins! Both Infobip and the telcos make money here.

And telcos will be making money for a long time to come and they will adapt to any change in the ecosystem but will they still be making as much as they are now? Maybe not as much as more players fight for a share of the consumers wallet and the enterprise’s budget. But, don’t worry about them, they will still do just fine. But expect their CEO’s to adopt a burning platform mentality as they keep their organisations on their toes for any future change coming.

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Me and my team of editors and writers who put together DNA’s fourth annual Deep Dive hope you enjoy the articles which range from how webe will compete in the market to the always important spectrum-related article and with our picks for the Top 2 Digital Devices in the smartphone, tablet and laptop category.  You can download the entire pdf through the image of the cover above. We will also be running each of the stories on a daily basis. Please send us your feedback at [email protected].

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