APAC Mobile Operators: Transitioning from Telco to Techco

APAC Mobile Operators: Transitioning from Telco to Techco

Mei Lee Quah, Director, Frost & Sullivan, 0

Mei Lee Quah is a seasoned corporate strategist with 13+ years engaging corporate decision-makers in APAC's telecommunications sector. Expert in corporate strategy, planning, and business development. She holds a 20+ year track record and extensive network in Telco, alongside 10+ years in the Payments industry.

Overall, the total 5G revenue in the APAC region will increase from $232.85 billion in 2022 to $387.30 billion in 2027, at a CAGR of 310.7 percent. By 2027, 82.2 percent of major mobile operators in APAC will remain as telcos with 25 percent likely to exit or become MVNOs assuming three player markets. Only 17.8 percent of major mobile operators in APAC will become techcos. In 2022, China, Japan, South Korea and Australia were the top 4 contributing countries to 5G revenue in APAC, but by 2027 India will replace Australia to join the ranks of the top 4. The outlook for 5G SA is positive as more countries embark on their 5G rollout plans and devices that support 5G SA become available.

The telecoms industry continues to face challenges driving growth from all angles, whether subscriber, revenue, investment, etc. Expectations for growth, especially with connectivity, is limited. With the world more digital and hyper-connected thanks to the pandemic and other factors, the bar has been raised for performance by digital companies, the pace of change is faster and difficulty levels are rising due to more agile software companies and markets being more competitive. The current context is making matters worse for mobile operators, while they have implemented some digital solutions due to the pandemic, most are still transitioning to fully digital and digitally first. This transition is a difficult one i.e., moving from consumer logic to a growth logic, and is estimated to take at least 1-2 years more to complete and not all mobile operators will make it.

Being passive and having depended on vendors for
innovation through the years weakened the industry’s ability to drive innovation, leverage technology and think out of the box. Future prospects, if based on current base line, deem that the options for new business and pricing models is limited. Urgent changes are inevitable as businesses need to evolve to trigger a new growth trajectory for the industry. Industry participants are aware of the need for change and some mobile operators have taken necessary steps to achieve necessary changes. Mobile operators that are unable to embrace change will face mergers & acquisitions as they will be unable to achieve revenue and profitability targets amidst rising costs and challenges with monetization.

Overall, there is industry consensus that a way forward for mobile operators lies with the successful transformation from telco to techco to stay relevant, generate revenue, and show growth in the future. However, mobile operators seem more conservative with concerns that many of them lack the capability, resources, and stakeholder support to undertake the journey from telco to techco.

The outlook for 5G SA is positive as more countries embark on their 5G rollout plans and devices that support 5G SA become available.

Vendors and suppliers can be useful to mobile operators when it comes to crafting and executing technology strategy to transition from telco to techco. In fact, vendors and suppliers can be the strongest partner a mobile operator can have. Mobile operators do not deny this fact. With the help of strong partners, mobile operators have been able to drive growth with some even registering positive increases in NPS scores, which has been a constant struggle in the telecoms industry.

This study specifically drills into the growth opportunities arising from the telecoms company (Telco) to technology company (Techco) transition in progress by mobile operators in APAC in depth. This includes a deep dive into the transition details e.g., mobile operator strategies, challenges, and range of outcomes. This study provides survey results on industry participant views on the need for the transition and factors that can identify who will succeed in the transition to complete within the next 1-2 years.

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