The way forward for telcos in 2018

The past few years have been difficult for telecom companies across the world; overall revenues and cash flows have dropped, even as consumption of mobile data has boomed. With masses of new mobile customers using their handsets to spend ever-increasing amounts of time online, telecos have responded by investing heavily in their wireless 3G and 4G networks. As a result, the average ratio of capital spending to revenues has remained incredibly high for major telecom organisations.2018 will be no different, and will continue to be a critical time for the Pakistani telecom industry, as companies compete intensely for market share. Pakistani telco consumers have become smarter with each year and now have a very lucid sense of understanding as to what they want from telecom services. In order to align themselves with the expectations of tech-savvy customers and remain competitive within an increasingly saturated marketplace, Pakistani telecoms will need to reinvent themselves in the year 2018.
As the country moves towards social and economic digitisation, telecoms will have to measure up or be left behind. This includes initiatives like E-Customer Care, to provide an end-to-end digital channel for customer service to reduce costs and increase customer satisfaction. Another major step would be to introduce digital processes that track customer footprints and assist in customer management, reduce costs and use 360-degree data and analytics on individual customers to personalise promotions and campaigns. Telecom companies must also create partnerships into adjacent businesses, such as financial services, IT services, or media. Most importantly, to fully leverage the digital revolution, telcos must revamp their IT by getting rid of redundant legacy systems and reducing costs with state-of-the-art technology that use analytics to streamline processes.
The voice/text business for telecoms has declined steadily in the past few years and similar trends will be seen in 2018.The telecoms of 2018 must focus on data marketing, as it is abundantly clear that it will become the core revenue driver. Operators will have to reorganise their teams and business models accordingly as most remain propelled by a 'voice-driven mindset'. Telcos must come up with smart distribution systems, which enhance data sales and provide businesses with robust communications infrastructure, further increasing data market share. There will be a greater focus on the delivery of 4G networks, and operators like CM Pak (ZONG) will work on strengthening their networks to gain a competitive advantage.
In the last year, the industry has seen some consolidation initiatives. The 2018 will demonstrate the real success of these initiatives as these companies try to align their technologies, networks, customer services, and sales and distribution. For these telcos, bridging the cultural gap between two merging entities will also rise as a challenge in 2018. The age-old strategies of cutting costs, trimming the workforce, and outsourcing networks may not suffice. The dividends of consolidation could evaporate if strategic clarity and a special emphasis on core business along with disruptive revenue streams are not brought into focus.
Pakistani telecoms must work towards creating new value chains based on a demanding user whose expectations will increase with each passing day. Many operators have responded to the steady pressure on margins by reducing costs - for instance, cutting capital expenditures or call-centre costs by 3-5 percent a year. Such modest cuts can help sustain margins but seldom produce big, lasting improvements. To make performance breakthroughs, the leaders of mobile operators must change their organisations in a fundamental way, starting with goals that might seem over-ambitious, such as reducing customer-service calls by 90 percent and inducing a proliferation of affordable smartphones in the Pakistani market. These improvements can be attained only if executives of telecom companies challenge their teams to achieve them.
Innovation will have to be the key strategic pillar; this has been lacking in previous years and will continue to make a vital difference in 2018. Robust and innovative solutions for customers can serve as new areas of growth for telco giants. The uptake of ecommerce and the rapid development of new incubators in Pakistan are harnessing entrepreneurial initiatives in our economy, with more and more youth concentrating on this. The mobile industry can play a key role in these areas and should focus on creating innovative solutions for this type of consumer. Solving customer needs and the creation of this new cultural mind-set should become a key focus for telecoms in 2018.
The word 'platform' has become a much-uttered word, with unfortunately little to show for it and minimal effort on creating comprehensive platforms in areas such as e-commerce, e-health, and e-government. This is because most Pakistani telecoms still possess an orthodox conventional mind-set and hence have not been able to effectively induce innovation into their organisational DNA. In the year 2018, telecoms will have to think differently, adapt to the changing needs of their customer base and remain ahead of their expectations, otherwise OTT players (like Amazon, Google, WhatsApp) and new emerging platforms will continue to eat away at their businesses. A special focus will be required on the part of CEOs to effectively import such platforms from their parent companies, as currently coordinated research and innovation barely exist within Pakistani telecoms, and there are no cohesive governmental initiatives which could complement local efforts. A unified and well-rounded effort in integrating platforms with the existing technology/telecoms landscape, along with a creative business model and customer services, and effective marketing will help telecos create a new source of revenue.
The China Pakistan Economic Corridor (CPEC) and its investments will further provide greater opportunities for telcos. However, in-depth initiatives must be in place in order to effectively avail these opportunities. Additionally, the safety and security of the country is a key focus in these trying times and, to this end, greater reliance on technology will be a key parameter. Hence, mega projects such as the 'Safe Cities' initiative will continue to grow. Telecoms must have an efficient and effective business model with their partners to gain substantial benefits from these endeavours.
It is important to for telecoms to bear in mind that large, capital-intensive businesses can resist major change. But technological advances in the mobile business have brought operators to a critical juncture. Now as never before, they have access to sophisticated network equipment, rich data on customers and operations, analytical power, and organisational prowess. As a result, mobile operators have an unprecedented opportunity to improve many measures of performance, from cash-flow conversion to customer satisfaction. In 2018, those that move boldly to transform themselves with these new capabilities stand to cut their costs and increase their revenues significantly, while building decisive advantages over their less ambitious competitors.
(The writer is the former Deputy CEO of Zong (CM Pak), a subsidiary of China Mobile. He also previously served as Chief Information Officer at PTCL. Currently, he works as a Certified Management Consultant, Strategist & Sales Guru. He can be reached at [email protected])