DUBLIN–(BUSINESS WIRE)–Added the report “Telcos turn to new technology and partnerships to drive broad cost efficiencies” to ResearchAndMarkets.com’s offering.
Telcos around the world are finally getting on the 5G bus, delivering high speeds with low latency and a seamless experience to businesses and consumers.
The latest connectivity standard presents growth and monetization opportunities for telcos with new services targeting a wide range of vertical markets. However, the inability of telcos to convert these opportunities into major new revenue streams has so far held back the growth of the industry.
One of the biggest concerns facing telcos today is continued profitability amid a massive investment burden, stagnating revenues, macro pressures exacerbated by Russia’s invasion of Ukraine, and intense competition from new-age operators. The success of telcos in the 5G era depends on unlocking value and efficiency through cost optimization measures, thus ensuring a steady flow of investments and profitability.
This is nothing new for telcos, as they have delivered solid profit margins amid a flat to marginal revenue growth environment over the past few years. To do this, they have resorted to the traditional method of reducing costs in previous mitigation cycles, efforts that have been narrow and tactical in nature. These include asset sales, real-estate rationalization, repair and maintenance outsourcing, shared services models, etc.
With uncertain macro-factors at play, telcos will find it harder to optimize costs through traditional tactics alone. To drive the big changes of the future, telcos need to implement dramatic, strategic steps to optimize their cost structure to increase and maintain profitability.
These strategic moves are a mix of technology-enabled solutions and collaborations, some of which will transform the telco’s business model. Each of the cost optimization measures targets multiple cost centers to deliver savings.
Listed below are five key strategic cost optimization steps that telcos will implement in the next 2-3 years:
- Automation: Automation will be a key enabler to achieve savings in cost areas such as networks (through automated fault detection and self-optimization systems, for example), energy (dynamic shutdown of unused elements of the network during idle time), sales and marketing (virtual assistants for support and customer experience), and G&A (automation of admin tasks).
- Open RAN/vRAN: Telcos can explore reducing multiple cost bases using open interface-based technology solutions such as Open RAN and vRAN. These can offer reduced network-related costs such as infrastructure rental, RAN power consumption, repairs, and maintenance, etc.
- Network sharing agreements: Telcos have for years turned to sharing network elements with them mainly to save costs. The most common method of network sharing is the joint use of cell sites, towers, backhaul transport networks, etc., which is called passive infrastructure sharing. It has evolved into sharing active network components over the years which includes RAN and spectrum components. To achieve further cost savings in the 5G era, telcos are exploring sharing core network components and functionality (so-called “core network sharing”).
- Partnering with webscale cloud providers: By partnering with cloud providers, telcos reduce network costs by moving critical network functions and workloads to the cloud, saving energy costs by deploying custom-designed energy-efficient hardware and architectures developed by cloud providers, and drive personalized marketing and customer experience by turning customer data into insights using cloud data and analytics.
- Network slicing: By segmenting parts of the network to address different customer types and use cases, network slicing will enable telcos to reduce opex costs through improved operation resulting from fewer cross-dependencies between network functions. It should also reduce maintenance costs as a result of isolated slice deployment, shielding disruptions to other parts of the network.
While the publisher expects these relatively new approaches to drive innovation in the future, telco cost mitigation will require a combination of traditional and broad strategic measures. The crux of any strategy is to bring together or bring together different business functions rather than being siloed, to drive maximum cost efficiencies across the telco organization.
Main Topics Covered:
1. Summary
2. Telcos Struggle to Maintain Testing Spending Amid Stalled Growth and Macro Pressures
3. Effective opex management requires further dissecting it into standardized cost categories
4. For Telcos, Network related Costs Single Account for ~50% of Total Opex
5. Group-Wide Efficiencies Will Depend on Controlling Overhead Costs Beyond Networks
6. Telco Labor Costs Rising Despite Industry Headcount Reduction
7. New Technologies and Partnerships Are Key Beliefs of Telco Cost Savings in the 5G Era
8. Continue Traditional Cost Savings
9. The Mix of Newer, More Strategic Cost Reduction and Traditional Approaches Will Vary by Operating Climate
Mentioned Companies
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1&1 AG
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Amazon
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AT&T
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Bharti Airtel
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Bouygues Telecom
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BT
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Charter Communications
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China Telecom
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China Unicom
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Comcast
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Deutsche Telekom
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Dish network
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Du
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Ericsson
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Etisalat
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Globe Telecom
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KDDI
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KT
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Microsoft
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MTN
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Netflix
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Nokia
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Ooredoo
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Orange
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Rakuten Mobile
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Trust Jio
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Service Today
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SK Telecom
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Telecom Italia
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Telefonica
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Telenor
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Telia
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Telkom Indonesia
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Tellus
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Turkcell
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Verizon
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Vodafone
For more information about this report visit https://www.researchandmarkets.com/r/ghkntp