Results from the Telco 2.0 Transformation Index show that SingTel and Telefonica lead the way in transforming themselves from engineering-led infrastructure businesses to innovation-led platform and production innovation players. A key driver of this has been in the bold efforts they have made to change their organisation structure and processes to support new services and customers via independent digital business units. The US giants AT&T and Verizon and the Middle Eastern CSP, Ooredoo, also covered in the first tranche of analysis, are at an earlier stage of the transformation journey.
STL Partners believes that all CSPs should be aiming to score 75% or more on the Telco 2.0 Transformation Index to give themselves a good chance of enjoying successful growth in the future. However, even SingTel (scoring 60%) and Telefonica (scoring 57%) deemed to be leaders in this space are progressing too slowly.
The Index consists of detailed analysis of individual communication service providers (CSPs) across 5 domains Marketplace, Servicing Offerings, Value Network (internal organisation and external partnerships), Technology and Finance. Quantitative and qualitative analysis has been conducted over 7 months by STL Partners analysts to determine the strengths and weaknesses of each CSP in each domain. Objective scores for each CSP in each domain are then calculated so valid comparisons can be made independent of geographic region and company strategy.
According to Chris Barraclough, Telco 2.0s Chief Strategist, Our analysis suggests there is a potential uplift to share prices of 45+% for CSPs that can transform from being pure infrastructure players to platform and production innovation companies. However, such a transformation is challenging. It is not simply about CSPs launching and handful of digital services. Transformation needs to be company-wide covering both hard factors, such as organisation structures and business metrics, but also soft ones, including business processes, partnerships and culture. The Telco 2.0 Transformation Index covers all this in depth and provides strategic guidance on the process of change in the telecoms industry.
The leaders SingTel and Telefonica are working hard to get their organisations in shape for the new digital world. However, to date, changes at CSPs have not yet yielded material additional value in the form of great new services and new customer relationships. It is clear that more needs to be done by all CSPs if the industry is going to avoid substantial value destruction over the next 5 years.
The Index draws on dozens of data sources, including surveys and interviews, to examine the strategic positioning and goals of specific CSPs. It uses The Telco 2.0 Intiatives tried and tested business model analysis methodologies and frameworks to calibrate how effectively CSPs are transforming themselves from a Telco 1.0 to a Telco 2.0 business model:
- It explores the transformation performance of leading communications services providers:
- Focuses on specific actions of individual players not just high-level industry-wide assessment
- Covers a broad range of existing and new service opportunities for communications services providers and their partners:
- Recognises that Telco 2.0 is not just about launching a few digital services
- Comprehensively assesses all the skills, assets and relationships that are needed to deliver Telco 2.0 successfully:
- Internal and external focus
- It examines Telco 2.0 transformation in the context of the broader marketplace:
- Appreciates that individual communications service providers do not operate in isolation but compete in telecoms markets with different dynamics and in the wider global internet services market
- Quantifies transformation performance based on hard data (where available) and assessment from experienced analysts (who focus only on new business models in the digital space):
- Objective, independent analysis supported by desk research involving hundreds of data sources plus interviews and surveys conducted within the industry
- Offers concrete and specific recommendations for accelerating Telco 2.0 transformation for the individual communications service providers covered and the industry as a whole:
- More than just analysis a source of strategic guidance.
At a time when full service telcos face a sharp decline in core revenues and uncertainty about new sources of growth in the digital economy, the Telco 2.0 Transformation Index is a new service that helps senior telco executives:
Make better strategic decisions in an increasingly complex and competitive world
Direct innovation efforts more effectively
Identify new ways of allocating resources and leveraging assets and capabilities
More about the Telco 2.0 Initiative/STL Partners
Established in 2006, the Telco 2.0 Initiative helps drive the transformation of the telecoms industry, looking in particular at new business models and service innovation. It is highly influential on the strategies of the leading players in the market.
The Initiative publishes ongoing research into new business model strategies, and runs regular high level ‘executive brainstorms’ in 4 continents (Europe, APAC, Middle East, Silicon Valley). These bring senior execs in the telco industry together with their peers in other sectors (banking, advertising, media, retail, etc.) to explore new opportunities for collaborative growth.
Research: www.telco2research.com
Executive Brainstorms: www.newdigitaleconomics.com/events
The Telco 2.0 Initiative was set up by analyst and consulting firm STL Partners, a specialist research and consulting firm. Our focus is on driving transformation through business model innovation in the Telecoms, Media and Technology sector i.e. how companies make money and grow in turbulent times.
Most of the telcos and technology companies around the world subscribe to our research, participate in our brainstorms, and use our consulting services, due to its unique focus and methodologies. We also work closely with the World Economic Forum in the area of personal data and have a seat on their global ICT agenda council.