Today’s market conditions are creating challenging times for telco players. Despite historically high customer revenue, margins are being squeezed because of the ongoing requirement for infrastructure and spectrum investment to meet an explosion in demand for data and various 5G Enterprise use cases.

What’s more, competition has been heating up while customer expectations evolve. And, we must consider the possible global  recession and regulatory pressure where, on a local front, Australian telcos are responding to policies around data privacy and cyber security.

Our report, Future of telco, discusses the steps telco players are taking to redefine their business and operating models, and shares the key capabilities KPMG professionals believe are required to succeed in each.

Telco sector outlook

  1. Traditional business models being challenged
    New options are emerging such as collaborations for private 5G networks.
  2. Escalating customer expectations
    Quality of experience is paramount. Virtual self-care models are becoming a common choice for rapid responses to network issues and outages.
  3. Hyper-competitive hyperscalers
    As the landscape evolves, there will likely be more direct competition between telcos and hyperscalers which are challenging the status quo.
  4. A possible global recession
    While Australia may possibly avoid a recession, many telcos across the globe are re-examining and reprioritising their capital plans and other areas like infrastructure upgrades and IT modernisation.
  5. Technology can create new opportunities – and threats
    The cost of deploying 5G (and future 6G) infrastructure has been prohibitive, and new technology such as low-Earth orbit (LEO) satellite connectivity is becoming a real possibility.
  6. Fulfilling the ESG agenda
    The higher cost of energy is one of many reasons to speed up decarbonisation. In Australia, a telco’s direct investments in renewable energy will provide for renewable energy generation equivalent to 100% of their energy use by 2025.
  7. Stricter regulations on the horizon
    Australian telcos have invested heavily into preparing for, and responding to, data privacy and related policies, however, there’s still uncertainty around regulatory requirements.

Making it happen

Telco leaders can consider these four strategic approaches to maximise their growth potential:

Doubling down on the network

To be successful in this business model, telcos will need to double down on core connectivity and network infrastructure. This means sticking to what made them great and focusing on delivering connectivity at scale with high speed and availability.

Focus on digital front end play

This approach is a continuation of the Virtual Network Operator (VNO) model, where telcos focus on applying an efficient, low cost and seamless digital front end as they seek to further sweat their network assets and drive margin and profitability.

Enhance managed services

This model focuses on moving up the value chain, offering a complete solution set to clients. Here, a more connected and integrated operating model centred on customers, employees and partners, can help drive its success

Making the telco to techno jump

For many telcos, their primary, overarching strategic imperative is to reimagine themselves as technology companies. Many of them are trying to move away from their traditional branding as network infrastructure providers.

Future of telco report

How today’s telco leaders can envision and create the future of connectivity.

How KPMG can help

KPMG Connected Enterprise

A more connected operating model may help your organisation adapt to these changing market conditions.

KPMG Connected Enterprise for telcos can drive an insight-led, client-centric approach to digital transformation, where our professionals will help you assess your organisation’s existing capabilities, identify any gaps and manage hurdles along the way. Talk to us about designing a new, customer-centric business model enabled by connection and innovation.

Learn more about KPMG Connected Enterprise

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