Great expectations: Here's why partnership gimmicks are not working out for telcos

Telcos expect a 16% revenue bump from partnerships, but only 30% have executed strategies with their partners.

Amidst high competition, telcos try to market their partner tech companies to get other user bases to sign up for their services.

Recently, Singtel introduced data-free streaming to Apple Music by signing up for their SIM Only plans. StarHub partnered with Nokia for IoT applications and OCBC for a unified loyalty programme. M1 also partnered with Nokia for entirely different software and Deezer for users access to its music library. 

Half of Singapore telcos expect as much as a 16% revenue bump in two years through this technique, also called the value partner ecosystem, technology consultancy firm BearingPoint revealed. However, these expectations could be too high and disappoint in the long run as tech-related problems loom.

According to a study, half of telcos expect partner ecosystems to drive cost-effective innovation, with 80% of them believing that partner ecosystems can help them remain competitive and just over two-thirds (70%) expecting ecosystems to improve customer experience.

Telcos also expect these partners to create direct customer relationships, enhance their own internal ecosystems, and improve efficiency.

As a result, half of telcos expect their revenues to grow by more than 16% over the next two years if they ever succeed in building partner ecosystems. About 20% anticipate revenue growth of more than 21%.

Despite their importance, telcos are “significantly behind” in implementing business models and digital offerings based on partner ecosystems, BearingPoint Asia Pacific senior representative Chris Stephenson said.

BearingPoint said only 30% of telcos in Singapore have embarked on execution compared to an average of 34% across industries surveyed. “40% of [telcos] are about to embark on execution, 10% are analysing their options, and 20% are at the very start of their journey.”

“That only a fifth of telcos appear to be in the initial stage is a matter of concern. A lot of telcos today continue to rely on rapid product commoditisation rather than proactively taking steps to create new more compelling products that will drive profits now and in the future,” Stephenson commented.

The study cited four problems frequently encountered by telcos when trying to implement these partner ecosystems.

About half do not have the appropriate technology to enable monetisation from their partners, whilst 30% cannot overcome the IT environment that cannot support a minimum viable product or fail fast concept.

About 30% also cited that they lack the technology to manage their partners. Another problem is creating flexibility within their ecosystem to respond to ongoing market changes.

Telcos are under pressure to innovate to counter commoditisation, win customers, and grow topline revenue. BearingPoint noted that few innovations are created solely in-house.

Companies leveraging digital platform-based business models have already doubled their growth rate compared to businesses that have stayed stagnant in their telco transformation efforts, Stephenson said.