Since the first mobile networks were established in Africa in the 1990s, mobile network operators have experienced exponential growth to become some of the largest and most profitable companies on the continent, with operators such as MTN regularly featuring among the top 10 most valuable African companies. The contribution of the telco sector to the GDP of African countries is immense: Nigeria’s National Bureau of Statistics in 2016 put the contribution of the telco and ICT sectors at 10% of the oil-rich country’s total GDP.
However, as the tech megatrends of hyperconnectivity, cloud computing, and connected devices disrupt telcos’ business models, mobile network operators are having to reinvent themselves to remain relevant. The days of simply providing voice, data, and a few additional services are over. Where operators in the past were hugely profitable, large-scale disruption is putting immense pressure on telcos to reimagine their business models and keep in step with consumer demands.
Over-the-top services have also forced a rethink of how telcos extract value from their extensive network infrastructure. WhatsApp, for example, has more than 900 million members sending in excess of 30 billion messages a day at no cost, bypassing the network operators and eroding traditional voice and SMS revenue. Ovum predicts that telcos will lose out on as much as USD386 billion between 2012 and 2018 to over-the-top VoIP services alone. And while some countries – such as Ethiopia – have banned calls and photo sending via OTT services such as WhatsApp, smart operators are leveraging OTT services to provide deeper levels of personalisation to customers.
Smart devices, smarter business models
With the proliferation of smart devices and real-time analytics, consumer expectation is also at an all-time high. This is forcing telcos to drive innovation and develop new revenue streams that leverage their extensive network infrastructure.
Telcos are also in a unique position to capitalise on IoT: smart city traffic grids running on mobile network infrastructure could provide real-time insights to city management that can be applied to improve the citizen experience. NTT in Japan, for example, is running a public transport project tracking tired drivers to ensure they are rested or replaced before an incident.
Ahead in the cloud
Mobile cloud traffic is predicted to grow eleven-fold between 2014 and 2019, creating a huge opportunity for telcos to leverage their unique infrastructure position to develop and host cloud applications.
For example, operators could establish private managed clouds and host ERP solutions for local government entities, saving them from having to invest in often prohibitively costly staff, overheads, skills and other costs.
Thanks to extensive networks even in rural areas where other forms of communication infrastructure may be lacking, telcos can also play an important role in providing last-mile connectivity to schools, while farmers can enjoy access to critical weather and market data to improve their crop yields and ensure they get an optimal return for their harvest.
Enabling the digital lifestyle
A Mobile World Congress survey found that 50% of global telcos estimate revenue from new services to be in the range of 15-50%. In Africa, some telcos have leveraged their well-established customer bases to position themselves at the heart of new digital services such as home security, transport, entertainment, and financial services.
Safaricom, for example, launched Little Cab, an Uber competitor designed for the Kenyan market. By utilising the telco’s network infrastructure and leveraging solutions such as M-PESA, which provides the option of cashless payments, Little Cab offers a cost-effective and personalised transport option the operator’s more than 25 million subscribers.
The digital core enabling telco innovation
At the core of the reimagined telco business models is an ongoing process of digital transformation. As telcos seek to improve the customer experience, respond accurately and in real time to emerging threats and opportunities, and streamline processes from procurement to workforce management and more, the need for a digital core that supports real-time analytics becomes paramount.
Personalisation in customer management, for example, requires telcos to be able to interact with customers on any channel of their choice, including email, social, phone and more. To enable this, telcos require a platform that integrates all channels and provides a single accurate view of any given customer, allowing them to interact with customers at an individual level.
With the rise of big data and analytics, telcos are also seeking the ability to understand issues in real time, and to address such issues accurately.
The networks established in the 90s simply won’t be able to cope with the increased demands of today. In many countries, regulators demand that telcos provide 99.999% availability of services offered or risk paying fines. Telcos can employ the power of SAP HANA Cloud Platform to digitise their operations and fast-track the development and deployment of new customer-facing innovations.
Telco CEOs today are at a crossroads. The great gold rush that typified the industry is coming to an end. OTT services are putting pressure on revenue, with disruption set to continue and possibly accelerate. Those who take a hard look at their operations and optimise processes while driving innovation will be well-placed to become the preferred digital providers for consumers and industry.
The time is now to build the new revenue lines that will take them through the next decade.
