Telecom companies face an ever more pressing mandate to transform their businesses amid an unrelenting tide of digital technologies and competition, according to our 17th Telecommunications Capital Confidence Barometer.
They are responding in three big ways: continuing to avidly pursue deals, reskilling for greater digital competence and digging deeper to deliver the synergies of recent acquisitions. All these efforts are buoyed in this Barometer by a sense of optimism about the global economy, the telecom sector and corporate earnings.
In the coming year, 59% of telecom executives expect to actively pursue M&A — that’s the second-highest level in the last four years. Telecom deal pipelines are described as growing, and expectations have more than doubled in the past year for completing an increasing number of deals in the near term (40%). There is a consensus on the digital impetus for these deals.
More than half of telecom executives, combined, say the impact of digital technology on business models (33%) and threats from digitally enabled competitors (28%) are the key disrupters affecting them.
What’s more, telecom companies are not only looking outside their organizations for growth and digital transformation. Over a third emphasize in-house digital skills development. And 64% are focusing on organic growth — indicating that, following a recent wave of consolidation, many are working to maximize synergies in their core operations while better leveraging their digital acquisitions to diversify revenue streams.
Integration has proved difficult, though. Thirty-nine percent cite the need to better anticipate integration challenges and opportunities ahead of any deal. One clear lesson has been that integration of information technology assets is just as important as network integration for telecom companies, as they position themselves for digital transformation.