The underlying transformation imperative is clear
Digital infrastructure investment is trending up worldwide. 5G commercial launches are nearing in many markets, while growth opportunities from pay TV to the internet of things offer telcos a range of convergence plays. Accordingly, expansion into adjacent sectors ranks highest as a strategic growth priority for telcos, cited by 27% of respondents.
Yet capitalizing on these new growth opportunities requires more than repositioning products and services to cater to new addressable markets. People and processes require fundamental overhaul, a reality that makes itself felt in executives’ key strategic drivers for pursuing acquisitions. Twenty-five percent cite access to technology, talent and innovative start-ups — the leading answer — underlining the importance of boosting organizational agility and efficiency while securing access to fresh thinking and new capabilities.
The operating model refinement is also apparent when it comes to capital allocation issues, with traditional investment in existing operations and new technology demanding the most attention from executives. Going forward, a delicate balance is needed as telcos look to both acquire new talent and reskill their existing workforce.
More frequent portfolio reviews are the order of the day
Frequency of portfolio reviews is increasing. Forty-one percent of telcos now undertake a review every quarter, compared with 24% in October 2018. This more regular cadence is creating transformation opportunities of its own. Thirty-one percent of telcos reshaped capital allocation across the whole portfolio as a result of their most recent portfolio review, while 26% differentially invested capital in a particular business unit. This comes at a time when activist shareholders are exerting more pressure than ever before. Eighty-two percent of executives say that activism is compelling them to take specific actions to reshape their portfolios.