Top 10 risks in telecoms: mitigating the threat

Mitigating the threats to operators

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6. Failure to capitalize on new forms of connectivity

New types of communication such as machine-to-machine (M2M) are redefining the concept of connectivity. Instead of continuing to think of connections in human terms, operators need to develop new understandings of connectivity and target new growth areas.

This will mean identifying core competencies for use in composite value chains and delineating clearly between the need to build capability and the need to partner or outsource.

Operators are responding by:

  • Building capability and credibility in the M2M market
  • Balancing unique selling points and partnering needs in cloud computing

New types of communication such as M2M are redefining the concept of connectivity, requiring operators to adopt new strategies.

7. Poorly formulated M&A and partnership strategy

Acquisitions and partnershipss are essential for success in emerging market segments such as mobile advertising and cloud computing. Operators need to discriminate clearly between when they need to acquire and when they should partner.

The ability to sustain partnerships will emerge as a strategic differentiator. Effective management and implementation of M&A and partnerships offers significant operational upside to telecoms players.

Operators are responding by:

  • Reviewing core competencies as a precursor to acquisitions and divestments
  • Providing clarity on the benefits of consolidation
  • Striking more productive partnerships with players from other industry sectors

8. Failure to define new business metrics

The metrics and key performance indicators that operators use to manage their operations internally and communicate their performance and prospects externally have not kept pace with the shift in business models from minutes to bytes.

Many internal metrics are still service- and network-oriented and do not provide enough granularity to improve the customer experience. Also, commonly used external metrics such as ARPU fail to give investors the full picture.

Operators urgently need to define a new set of metrics that puts the customer fist and enhances communication of financial performance.

Operators are responding by:

  • Overhauling customer metrics
  • Looking beyond EBITDA to describe new revenue streams
  • Focusing on new types of coverage and penetration metrics

9. Lack of privacy, security and resilience

Customers place more trust in operators than in social networks, regarding operators as security guarantors across a range of services. Yet they still hold operators responsible for threats from third parties even for mobile malware attacks and rogue apps.

Operators should work closely with governments to clarify their responsibilities in areas such as anti-terrorism and content for children, and collaborate with suppliers and partners to tackle privacy and security issues in new service areas such as cloud security and mobile apps.

Operators are responding by:

  • Outlining specific areas of responsibility to regulators
  • Prioritizing robust network infrastructure
  • Leveraging trusted brands to launch new security-centric services

10. Lack of organizational flexibility

With their organizational structures subject to forces such as the shift to data services, the rise of partnering and the imperative for speed-to-market, operators have already made significant changes to their organizations. But more are needed.

Operators now need to align their business units to maximize the economies of scale and scope in their geographic footprints while reconciling the competing forces of geographic sensitivity and global strength.

Operators are responding by:

  • Bringing together new competencies in digital business units
  • Creating a culture of innovation
  • Transforming go-to-market to serve customers better

Click here to read how operators are responding to risks 1 - 5