Partner or fail: The Telco war

Today’s telco landscape has become a lot more challenging, presenting new players to the game and more demanding end-users.

With the digital era rocketing full-steam ahead, the growing tendency for new information technology to emerge first in the consumer market and then spread into business and government organisations – dubbed consumerisation – is seen as a major IT industry shift.

Couple this trend with the thirst for unified communications, and added pressure such as the extra high bandwidth consumption of video, no single entity or group would be able to manage and grow alone in the ever-expanding market.

Consequently, we are seeing a “Partner or Fail” culture, where the telecom industry is partnering both within and externally, becoming the norm - both as necessity to survive as well as to address the fast growing telecommunication opportunities in emerging markets.

Mobile connections are seeing rapid take up rates globally - by the end of 2014, Ovum forecasts 6.42 billion connections, up 59 percent from 2008, and a CAGR (Compound Annual Growth Rate) of 8 percent, with Asia-Pacific growing at 10 percent CAGR with penetration reaching 78 percent.

This enormous rise in connections has huge financial implications for Asia-Pacific mobile network providers as they are expected to grow by 80 percent from 2008 to 2014, while revenues grow by 40 percent.

Driven by such opportunities, several types of collaborations have emerged within the telco industry.

These include partnering with content providers to jointly invest in network infrastructure in order to handle the expected video traffic and data deluge, thus reducing operating costs for both companies; working with mobile network operators (MNO) and mobile virtual network operators (MVNO) to offer low cost fixed and mobile services through ready networks to customers in emerging markets; and fielding the enterprise communications markets together with IT vendors where the telecom operator provides network connectivity and the IT vendor sets up the business systems infrastructure.

These models ensure the long-term sustainability for the telco industry, as well as benefit the individual parties involved. The benefits for these types of new partnerships are already evident.

According to new research from Channel Partners and CompTIA, some companies are generating up to three quarters of annual revenue from strategic and tactical collaborations.

Among telecom agents, one-fourth said partnerships with IT firms accounted for 25-49 percent of revenue in the last 12 months, while about one in five telecom agents saying they generated more than 50 percent of revenue from partnerships. Welcome to the digital era.

With the penchant for patience ever diminishing in the consumer space, telcos are constantly evolving with new innovative partnerships and solutions to not only tap on the strong telecom growth in Asia expected for the future, but also to maintain the high level of service expected from them.

Partnerships will help telecom operators evolve and leverage on each other’s strength, because if they do not manage themselves carefully and make the right choices, they may inevitably fail. 

Diarmid Massey, Managing Director, Global Wholesale & Carrier, Cable&Wireless Worldwide