Telecoms CEOs must embrace effective change now

Telecoms CEOs must embrace effective change now
Image by ismagilov | Bigstockphoto

The uncertainty of the future economic viability of the telecoms business is making change an immediate necessity. CEOs need to make this their top priority.

Mobile operators are currently struggling with an identity crisis. Their vendors have been acquiring new strengths to tackle the potential of digital through M&As (e.g., Ericsson acquiring Vonage). Meanwhile, IT players have been encroaching into the network space (e.g., Microsoft acquiring Metaswitch) for network capabilities to further tap into the enterprise opportunity.

Mobile operators also hope to cash in on the enterprise opportunity, especially with 5G. But only a handful of mobile operators – such as Singtel, Vodafone and T-Mobile – are leading the way with 5G solutions for enterprises. 5G solutions are coming out of boxes to make it easy for enterprises to adopt.

New 5G business models needed

More success with 5G is needed, but the industry is facing serious challenges, namely cost and monetization. Actually, even with high costs, the business case would still make sense if monetization was not an issue. Therefore, while costs do need to be managed, monetization may in fact be the bigger problem.

New innovative business models need to be crafted to re-engineer cost and reduce risk. A 2022 Frost & Sullivan survey found that 60% of respondents cited that they don’t believe the “Build it and they will come” approach will be sustainable from 5G onwards. So, mobile operators and their regulators need to consider new approaches to improve their future prospects.

Of course, 5G will be embraced where there is demand for it. Indeed, 5G is finding a place in some of the most automated industries, such as existing semiconductor factories in Taiwan, driven by use of augmented reality and artificial intelligence. The companies that are moving faster with 5G are doing so because it’s an exact fit for the need being addressed. However, the reality is that others require some development for 5G to make sense.

Telecoms CEOs must learn to love collaboration

The success of a few companies such as Rakuten Mobile taking a different approach and achieving better outcomes signals that it’s time for a review of the relevance and effectiveness of global alignment. Competing global IT players can craft and execute monetization strategies faster than the global associations that bring together the more than 750 mobile operators.

Beyond connectivity, the need for end-to-end integrated services cannot be met without greater collaboration. The legacy mentality of control needs to give way to trust, as future growth of the telecoms industry depends on how well companies can collaborate.

Of the many partnerships that have been announced, many are collaborations with companies that do not compete with each other. Part of the reason for this could be attributed to collaboration skills being rare amongst the telecoms industry workforce, where a large majority of workers still comprise men, and the industry still struggles with discrimination. Another reason is that tapping opportunities requires companies to be more open, which is still something that doesn’t come naturally for many companies, especially in the telecoms sector.

Change requires long-term thinking

The telecoms industry faces a skillset shortage that hampers the adoption of new emerging technologies and new practices. Attracting top talent is a challenge, as telecoms is no longer a high growth industry. The incorporation of automation in parallel further adds complexity as mobile operators need to find the right balance between human touch and automation. Finding the way forward with culture and talent requires a clear strategy for business transformation.

The industry is well aware that change is necessary, but achieving change remains an uphill battle. Until recently, decisions have been short-term ones. The business transformation necessary at this juncture is a long-term play, where clarity is elusive and success is not guaranteed. This increases the difficulty in getting everyone on-board, investors and customer alike.

However, the future of the telecoms industry is at stake – and the future may be quite bleak unless mobile operator CEOs adjust their agendas to make effective change an immediate strategic imperative.

Written by Quah Mei Lee, Director at Frost & Sullivan

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