Telcos accelerate digital transformation but revenues remain store-based

Following the unprecedented connectivity demand across the world caused by the Covid-19 pandemic, as many as three-quarters of global telcos are increasing their digital transformation investments, but only a quarter have established by what metrics they will measure success.

A new report from the Technology Innovation Council, commissioned by mobile technology specialist Upstream, shows that almost two-thirds (65%) of telcos have developed a roadmap for their own digital transformation, but the companies still rely mainly on physical channels to sell their products and services, even if they know the value that digital sales can create for them.

The report, The road to digital: how telcos are migrating from physical to digital to broaden revenue in 2021 and beyond, highlights the growing opportunity for telcos to grow their customer base and broaden their revenue streams throughout the Covid-19 crisis if they are willing to embrace digital. The study surveyed executives from 56 operators worldwide, who were asked about their plans for digital transformation.

And with so many telcos having coined their digital strategy roadmaps and change management blueprints, more than half (57%) have already assessed their technology needs. At the same time, though, the study pointed to a gap between top-line strategy and tactical digital project deployment. Only a quarter indicated that they have determined the metrics by which will measure the effectiveness of their digitisation strategies.

The report also revealed what operators regard as the key benefits to their business from digital transformation – cost reduction via automation (66%), improved customer experience (59%), improved revenue growth (46%), efficiencies through automation and more effective marketing.

By contrast, the likely main challenges that telcos anticipated in their digital journeys were: integrating new solutions with existing technologies and platforms (73%), privacy and data concerns (54%), cost of new solutions (46%), establishing the return on investment (43%) and internal skillset (34%), or rather the lack of it.

To Upstream CEO Dimitris Maniatis, these were totally legitimate concerns. He questioned how firms could improve customer experience by going online when they still hadn’t figured out how to make online transactions safe. “To succeed in creating value from digitisation and fast, telcos need to indeed balance a fine line, overcome the big organisation inertia, escape the drawing board and aim for smart quick wins and solutions,” he said.

The study also found that the evident disconnect between telco digital strategies and action manifested itself in operators’ reliance on physical channels to peddle their own goods. It added that during a year with lockdowns and closure of physical stores, telecom operators did go online to sell their products, but more than 70% said they still generate revenues mainly from physical stores and call centres.

Proposing a reason to switch to digital sales channels, the report noted telcos’ capability to use multiple channels for any given customer-eaching campaign – SMS, RCS, email, push notifications, and so on – as a key upside.

As revealed by the report, telcos have already started to employ data to strengthen and grow their customer base with digital sales, using it to upsell and cross-sell to their existing customers (66%) as well as to acquire new ones (55%) digitally. About half of them (52%) said they have already discovered the power of targeting and retargeting, an essential tool to connect with customers, help them make the decision to buy, and increase sales and loyalty.

“There is a quick win to be made for telcos in digital sales,” said Upstream deputy CEO Kostas Kastanis. “They are less costly than stores and call centres, have proven higher success rates, and allow more accurate targeting than physical channels. The consumers are already online and some will never return to close-up transactions, as they did before the pandemic.”

Upstream said that as the so-called “new normal” takes shape and millions of people continue to rely heavily on their mobile devices for work, entertainment and communication, there has never been a better time for telcos, particularly MNOs, to take note of the ones ahead of them and work out solutions for the hurdles they see, such as integration with legacy systems or working out return on investment. They will then start to see the benefits of the digital road in their top line and customer experience sooner rather than later, it added.