B2B 2015: The Future Role of Telcos in ICT Markets

ICT industry has been observing new trends on a continuous basis which are primarily an outcome of fusion of IT and telecoms. All this has been influencing the B2B operations. Telecos are required to deeply analyze the market and the ongoing trends to aptly utilize their growth and revenue potential.

Businesses to business communications are very essential in today’s competitive times. Consistent evolution is constantly altering the current working process and is also shaping the future face of industries. Every year demands for meticulous planning and well defined strategies to assist an organization in achieving the set goals and simultaneously stand tall in the market.

Convergence of telecommunication and IT has faded the differences that were once very evident between the two industries. The current scenario is such that many telcos are looking beyond the basic data and voice services and have begun retailing IT services by using their current IT assets. Many telcos have hold on IT companies that enables them to fuel growth in IT services. Industry witnessed many mergers in the past, for instance KPN’s merger with Getronics and the recent NTT’s hold over Dimension Data. Markets trends are no different and have various examples such as association of Telmax and Hildebrando and Indonesia’s merger with IT player Sigma. The convergence in not proceeding in single direction, but is multi directional, as many IT services for instance cloud services are becoming dependent on communication gadgets.

More and more companies are engaging Chief information officer (CIO) to take decisions related to both IT and telecoms. The emerging trend has consolidated the services and telecom and IT suppliers. CIOs are required to gather detailed information about the services and should clearly determine the fading differences between mobile and fixed telecoms, data and voice or IT and telecoms.

Emerging Markets – B2B Growth Engines

B2B growth is approaching the emerging markets to explore new opportunities to generate more revenue. High growth rate is the reason why telcos are planning to become credible ICT players. Convergence of IT and telecom is expected to widen the scope of B2B, owing to which the future will observe B2B growth rates exceeding B2C rates. IT services can well assist telecom industry, but they come attached with smaller margins. If we compare EBITDA margins for telecom services one will find out that they can increase by 35 to 40 %, while EBITDA margins for IT services will be as low as 5 to 25 %. EBIT is lucrative in regard to IT services and the lower capex requirements as compared to telecoms. If we shift our focus to EBIT margins then we will observe that the margin for IT services is approximately between 5 to 10 percent, whereas for ICT services it lies between 10 to 20%. It is required by telcos to meticulously examine the margin prospects and resources to receive key benefits that are more profound than their counterparts.

Experience High Growth Rates

The growth trajectory of ICT has observed a sharp rise in the current market analysis graph. Recent surveys have reflected that customers always look forward to adopt new technology and services for better outcomes and performance. Advanced ICT services are expected to play a vital role in shaping the growth and revenue chart.

Open Market Structure

Market structures and potential to rise is more in emerging economies than in the developed ones. Emerging markets are highly fragmented and are equipped with a defined range of services available. The open market structure is more favorable for the ICT as there are more opportunities and fewer conflicts to deal with. Early market development stage has a disadvantage that only a few companies can achieve the growth.

Six B2B Trends and their Telco Implications

To better analyze the equation between B2B growth and telcos McKinsey initiated a survey to throw light on various aspects involved. Increase in internet dependent connectivity is expected to boost the growth rate by 33% per year for multiple services where telcos have an edge. Switching to IP will come attached with its own set of implications as it demands meticulously crafted network design and skills to work with IP based products. This situation often leads to some degree of customization so that it can work well with ICT systems. Software capabilities are also expected to take new forms and will be less chaotic and wired and more programming oriented. Transition from traditional Telcos to IP solutions will require careful management. Growth rate of around 20% is expected in cross platform integration and unified communications. Trending examples of these services comprises applications, desktop video conferencing that are supported by various devices such as smartphones, tablets and PC’s. 

Investment in cloud infrastructure has been experiencing an upsurge of around 30% each year. Cloud computing basically emphasizes on three key services that are together recognized as “X” as a service-XaaS. It offers applications to customers that assist them in data storage, computing power and infrastructure management. Virtual private cloud offers an enterprise to make use of secure private space on shared infrastructure. Researchers expect that virtual private networks will add more to the revenue and will be adopted by many in coming years.

Mobile Services Latest Trend

Next generation mobile services include machine to machine (M2M) applications that offer tremendous potential to B2B services to grow. M2M comprises smart metering, vehicle asset tracking and remote heath services. Telecom service providers can take benefit of their large customer base and widely spread area of operations to achieve high growth rate. Telecoms need to collaborate with latest innovations in the industry to actively participate and contribute in the growth of enterprises.

Consider Customerization

Customerizartion is integration of devices of customers, businesses and markets. The demand for dynamic devices is raising and has been adding new trends in the sector with more and more devices getting employed by IT teams. 

Future Prospects of B2B

Wide scope to explore and infinite strategy options will assist of B2B segment in reaching a wider client base. Telcos should focus on escalating their capabilities and performance. Shifting to ICT comes with its own set of risks and challenges. To overcome these challenges telcos needs to improvise and improve their technical, operational, and commercial capabilities. Sales team also requires bucking up their potential and delivering according to the needs of their customers.       

Source by Anubhav

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