![]() And it put telcos front and center, as almost every aspect of human interaction moved online amid lockdowns and physical-distancing measures.įaced with an unprecedented crisis, operators innovated quickly, adopting rapid decision-making and response processes across the board-from assurance to credit decision making to pricing-with an absolute focus on customer support. It provided a blueprint for a faster, leaner new operating model, made possible by rapidly shifting behaviors. The pandemic amplified the urgency of profound, accelerated reinvention. As demonstrated by pre-COVID-19 performance, though, that formula has been running out of steam. In parallel, many expanded into new industries, such as TV and information and communications technology (ICT), to increase revenue streams. Most operators responded to these daunting challenges with a mix of efficiency measures, digitization efforts, structural changes (such as network sharing), and productivity improvements. There has been new-entrant disruption, with increased competition among traditional players as well as nontraditional players, which have shifted value toward technology-focused parts of the value chain (for example, software-defined networking in a wide area network, software as a service, and over the top ). There has been business-model disruption, with technologies like AI, big data, and the Internet of Things redefining service-delivery and value-capture models. There has been customer-back disruption, in which digital-native companies like Uber and Netflix have set a new standard for seamless online experiences, forcing incumbents to redefine their interaction models. Decision time for telcosīy the time the pandemic hit, the telecom industry had been managing over a decade of disruptions, driving deteriorating economics (Exhibit 1). The current moment demands a holistic, future-back approach to transformation, in which leaders deliver on four or five bold, integrated changes to reset their organization’s DNA. The next generation of telcos will be defined by leaders who act now, risking short-term incumbency advantages to seize untapped growth. ![]() ![]() Therefore, we believe that 2021 will be a critical year for operators: a unique opportunity to fundamentally reimagine their business or, alternatively, risk another decade of decline. Our prior research has demonstrated that organizations that move early to restructure and change during times of crisis come out ahead in the subsequent decade. While telcos rose to the challenge of 2020-connecting people to work, school, family, and healthcare-the pandemic accelerated and amplified trends that were already redefining the basis for success. Over the past decade, telcos have been under continuous pressure as their traditional value pools have gradually eroded and new growth horizons have proven elusive, driving return on investment capital (ROIC) ever closer to weighted average cost of capital (WACC). For the current generation of telecom leaders, this is stark reality, not merely perception. Each generation of business leaders tends to believe that the challenges they face are more profound than those endured by previous generations. ![]()
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