Finance transformation Telco revolution
Telecoms companies are coming under pressure to cut costs and become more customer-centric. But what are the advantages they stand to gain through adopting a natively digital approach, and what are the fi nancial implications of their digital transformation? Ian West, partner and head of technology, media and telecommunications at KPMG UK, and Laura Morroll, director of technology consultancy BearingPoint, tell Abi Millar what the future holds for telcos.
I
n recent years, the telecoms industry has been undergoing an almost unparalleled digital transformation. Faced with shifting business models, and the steady erosion of traditional revenue streams, telcos are being forced to rethink what they offer customers. “They must do so or they won’t survive,” says
Ian West, partner and head of technology, media and telecommunications at KPMG UK. “The competition will easily outpace the ones that don’t have the energy and courage to swiftly adopt change – and this change is mandatory across all components of the traditional operating model.” These are stark words, but they’re borne out by the facts. The sector has fallen out of favour with investors, with the value of listed telecoms companies falling by almost 20% between 2019 and 2020. They are also coming under pressure to invest in 5G and to remove potentially harmful Huawei kit from their networks, at a cost of hundreds of millions of pounds.
Meanwhile, technology breakthroughs are emerging at an unprecedented pace. “The fact that this is happening across the different domains – telecoms, computing and data – plus the accelerator effect of the pandemic in customer behaviour, has us believe that a ‘perfect positive storm’ now exists in the sector,” says West. “Telco can no longer win customers through price reduction alone. It needs to differentiate on customer experience.”
Moving beyond connectivity This is particularly true in the wake of the pandemic. As people switched to remote working, and in-person interactions moved online, fast connectivity became little more than a baseline customer expectation. This means simple mobile or broadband services, once a selling point, are no longer enough to carve a niche in the marketplace. “Telco businesses are having to think about how they can compete with the agile mobile competitors
Finance Director Europe /
www.ns-businesshub.com Finance Director Europe /
www.ns-businesshub.com
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