Digital Transformation & Maturity

Tracking the digital dollars: Strong propositions

In this final installment of Mark Newman’s look at firms’ quarterly results, he examines strengthened market focuses, and the advantages that come with developments in IT. Have a read of the first and second articles for more of Newman’s insight.

Strengthening the business-to-business proposition

There has been a definitive shift to a business-to-business (B2B) market focus over the last two to three years. However, the benefits of this shift have yet to impact financial results, with most operators reporting flat or very low, single-digit revenue growth. In most cases, the investment in the enterprise business involves an expansion from core communications services into more broad-based ICT service provision and new propositions in cloud, security, IoT and IT services. Many operators are acquiring specialized (either geographically or vertically) service providers to strengthen their enterprise proposition.

Some CSPs are focusing their ICT services expansion on specific verticals. Swisscom noted “better trends in the solutions business” (verticals such as eHealth, banking etc). China Mobile “continued to develop vertical industry solutions by focusing on seven key sectors, namely industry, agriculture, education, public administration, finance, transportation and healthcare.”

  • AT&T announced in June that it was buying the Vyatta assets of Brocade.Analysts have speculated that it will use Vyatta’s vRouter technology within its own network and resell it to enterprise customers.
  • Telekom Austria acquired Swiss cloud-services provider, Exoscale, in August.
  • Verizon closed the acquisition of Yahoo in June and integrated it with AOL assets to create a new company called Oath which provides services for the B2B digital media market.
  • SingTel acquired adtech firm Turn in April and folded it into SingTel Digital Life, its division for digital media and analytics solutions.
  • Vodafone recorded 1.5 percent growth in its enterprise revenues in the quarter to end June.
  • China Mobile registered a 25.3 percent increase in enterprise revenues in the period from April to June.
  • SingTel’s ICT Services subsidiary, Infocomm, saw its revenues in the three months to June 2017 rise by 6.4 percent.

Benefits derived from new IT technologies and architectures

DevOps, agile software development, data analytics, artificial intelligence (AI), cloudification and virtualization may be concepts and approaches that CSPs are embracing today, but there are few mentions of them in companies’ quarterly financial results. However, a few CSPs are starting to reference services and customer experience improvements that use some of these techniques.

  • Vodafone noted that it will be introducing more customer experience improvements by leveraging its analytics capability.
  • Telefónica expects to unveil a new wave of value creation through its use of ‘cognitive intelligence’. This will deliver an “optimized customer experience”, “enhanced operational efficiency” and “new optionality” (a broader service offering both from Telefónica and its partners). Telefónica will also launch AURA, its voice-assistance service that uses AI in several markets.
  • As part of its strategy to use “smart analytics to drive value”, KPN says that it has already created a “uniform digital layer” for its customer touchpoints. It also states it is using data and analytics to optimize customer service, to upsell and cross-sell, and to optimize network investments.

Key takeaways

There is a huge variation in the level of information (and associated KPIs) that CSPs divulge with their overall financial results. As a rule, we believe that the more confident a company is about the success of its digital initiatives, the more likely it is to provide detailed information. Overall, we believe that CEOs and CFOs are becoming more comfortable with the idea of discussing digital initiatives with their investors and shareholders. This is important as digitization will have such a profound on their businesses for decades.

Our next analysis of operators’ ROI on digitization will examine the period from October to December 2017. If you have any specific requests in terms of the companies that we chose to cover, or the initiatives that we assess, then please email Mark Newman via [email protected].

If you’re a C-level executive and would like early access to content like this, join our Digital Leader Network. Contact Arti Mehta via [email protected] to learn more.


    About The Author

    Chief Analyst

    Mark Newman is an analyst with 25 years of experience delivering insights on the future of the telecoms sector to senior level executives and audiences. Mark’s recent research has focussed on telecoms operator business models, digital transformation, service provider diversification, and the intersection between Internet and telecoms. He delivers analysis, presentations, strategy sessions and workshops to global audiences, helping them to plan for the changes that technology and disruptive new business models that will fundamentally transform their businesses. Mark was Chief Research Officer at Informa Telecoms & Media and Ovum before leaving to set up his own research firm, ConnectivityX, in 2016. He joined the TM Forum as Chief Analyst in February 2017.

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