Top 10 risks in telecommunications 2012

Risk 8: Failure to define new
business metrics

  • Share
Customer-level usage metrics such as minutes-of use tend to hit a plateau once users' consumption behavior becomes established.

In combination, operators' internal requirement for information to turn demand into value, and their need to sustain confidence among investors and other external stakeholders, are driving a further sector imperative: an urgent demand for fresh ways to measure and communicate progress through a new and different set of KPIs.

Metrics are inadequate internally and externally

In terms of internal measurement, the problem is that operators' current metrics fall short of providing the new and timely insights and business intelligence they need to maximize value in the evolving ecosystem. Many internal metrics are service- and network-oriented and do not provide enough granularity to improve the customer experience.

External stakeholders such as investment analysts are currently trying to gauge the value of telecoms companies by reviewing revenue, ARPU and basic subscriber growth numbers that fail to provide a full picture of a sector moving from a high-growth to a pure investment-yield story.

KPIs for consumer fixed-line services9


Key performance indicator Rationale
Return on invested capital (ROIC) Measures efficiency to utilize the capital invested to generate returns
Return on capital employed (ROCE) Indicates the efficiency and profitability of the telcos capital investments
Revenue generating unit per subscriber RGU per sub describes the average number of services taken subscribers, reflecting bundle take-up
TV market share Share of the TV market helps communicate IPTV strategies

Metrics to put the customer first

To address these shortcomings in their internal management information and external communications and reporting, operators should evolve metrics that put the customer first, and create more granular external KPIs that highlight network usage and related costs or new service take-up. This will enable the sector's metrics to catch up with the way its products and services are progressing from mobile voice growth to mobile data maturity.



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9KPN, “Third Quarter Results 2011,” 25 October 2011.