GCC telecom operators face stiff competition as they seek to grow. Companies face gradual, steady rises in their investment with only slow increases in revenues. Telecom leaders rightly want to leave this unappealing environment and instead grasp growth opportunities. They can achieve growth by being more market-facing and by harnessing the abilities of their chief technology officers (CTOs) and the technology function.
The problem for operators is that prices in mobile broadband are falling because of intense competition, while customers are abandoning fixed broadband. Operators in Saudi Arabia are facing lower data yields because fair usage policies give users plenty of capacity, use of social media is not capped, and there are fixed-wireless data plans. Unsurprisingly, the fiber connectivity market has stagnated since 2021, while the fixed wireless access market has increased by around 40 percent.
The evolution of technology also mean more competition for telecom operators. Hyperscalers (large cloud and tech companies) are offering virtual network functions, while there are unconventional connectivity providers that use low earth-orbit satellite operators.
It is challenging for telecom operators to mobilise a response given the low growth environment, but opportunities exist in the GCC. For example, we believe that Saudi consumer demand for digital services, gaming, media, and consumer devices, including 5G handsets, could expand by over 10 percent during the next three years. Similarly, new fixed broadband infrastructure could mean 3.5 million new households linked to fast access, worth SAR 4 billion ($1 billion) to operators who succeed in that market. Demand for business-to-business digital services (which includes the Internet-of-Things, cybersecurity, and cloud services), has potential for 15 percent per annum growth over the coming three years. The government is expected to spend over SAR 1 trillion ($266 billion) in 2023 which means more appetite for business-to-business digital services and mega projects.
To grasp these opportunities, telecom operators should reshape their technology capabilities. That means six imperatives for telecom leadership teams, in particular CTOs.
First, CTOs should change the architecture of their technology landscape, which can reduce complexity and create value. That means taking onboard configurable and modular cloud-based applications faster so that companies can get their products to market rapidly. That also means controlling costs more effectively, increasing value creation, and more effort in terms of innovating services rather than infrastructure management. For example, Zain has monetised its infrastructure by selling 8,000 of its telecom towers.
Second, there is an opportunity to treat telecom assets as platforms and marketplaces. Telecom operators are sitting on large amounts of data and services that can create winning propositions for their business customers. Operators should seek to extract more value from such underused assets, as some global firms are doing. For example, operators can set up marketplaces for application programming interfaces (APIs) suppliers and application creators.
Third, CTOs must complete their company’s move into the cloud. Possessing cloud network functions is now basic in the telecom sector, so getting there first matters. Operators that are in the cloud will be able to form alliances with cloud providers to sell Edge computing and enterprise solutions, as Verizon and Amazon Web Services have done.
Fourth, there must be more technology innovation. Instead of being innovation consumers, operators should become technology innovators. That will allow them to move away from their core businesses. Innovation will help companies invest in the technologies of the future. Innovation means creating and hubs and partnerships, as Orange had done with its Hello Future initiative. That way companies can experiment with services that use such emerging technologies as drones, the metaverse, and blockchain.
Fifth, CTOs need new delivery models that are agile. To be able to provide solutions to internal and external clients, a telecom operator’s technology organisation needs robust capabilities. That involves winning a greater share of digital services opportunities in megaprojects through active engagement with business units during the sales process. Design thinking principles along with agile delivery for all core products will allow operators to get products and services to market within two months, faster than often happens at present.
Sixth, CTOs must push constantly for operational excellence. That means operating more efficiently with multiple vendors by thinking about the reconfiguration of outsourcing strategies and the management of supplier quality. CTOs should improve the customer experience and exploit synergies through the improved integration of field services and commercial operations. To create value and growth, companies need cost effective, end-to-end technology service management.
Technology organisations can help GCC telecom operators escape from today’s low growth environment. Telecom CTOs will achieve this by helping their companies to change and innovate, allowing them to find noncore growth opportunities.
