From telco to techco: Towards tomorrow's telecom

The term "techco" is a relatively new buzzword that has emerged to describe the transformation of traditional telecommunications companies (telcos) into more technology-focused and innovative businesses. This transformation is driven by the rapid pace of technological change and the increasing demand for digital services.

The evolution of telcos into techcos reflects the convergence of telecommunications and technology. As the digital world becomes increasingly interconnected and reliant on data, techcos are poised to play a crucial role in shaping the future of communication and innovation. Today’s telcos know that in order to survive and thrive in the digital age they should be built around their customers, with an ability to continuously respond and adapt to ever-changing needs.

From telco to techco: Towards tomorrow’s telecom

The opportunities for leaders are significant. Yet the journey from telco to techco is complicated and requires vision, focus and a connected approach to delivering the transformation.

Download

Signals of change

Telco service revenue has stabilised over recent years. Despite substantial revenue growth in technology-related industries, telco operators experienced slow revenue growth at a compound annual growth rate (CAGR) of just under 1 percent¹. This sluggish growth is primarily attributed to stagnant consumer service revenues, with both fixed and mobile subscription numbers reaching saturation points, and intense competition continually eroding average revenue per users (ARPUs). As a result, telcos are increasingly shifting their focus to the business-to business (B2B) segment as a key driver for revenue growth.

Telcos should continually invest to avoid becoming outdated.
Business-to-consumer (B2C) customers seek fast and reliable connectivity, personalised services, and an excellent customer experience.
B2B customers are looking for secure, scalable telco solutions with integrated services and personalised support.
Traditional telco models are focused on infrastructure and network operations, with less emphasis on customer experience.
Telcos’ traditional business models are no longer fit for purpose to address the new digital opportunities.

What are the key characteristics of a techco?

Techcos are the modern evolution of traditional telecommunications companies that have embraced the digital landscape and beyond. They prioritise innovation, digital transformation, and customer experience. Techcos are characterised by their focus on:

Client centricity
Digital experience
Automation
Data utilisation

In the pursuit of techco status, recognising ambition alone won't necessarily suffice. In our view, a strategic paradigm shift is imperative, necessitating a holistic restructuring of the telco company's operational landscape.

As telcos embark on transformational journeys to adapt to the evolving digital landscape, they may encounter several challenges that could hinder their progress and success.

Telco companies that can effectively address these challenges are typically more likely to succeed in their transformational journeys and maintain a competitive edge in the evolving digital landscape. By embracing agility, fostering innovation, and prioritising customer needs, telcos can navigate these challenges and likely emerge as leading players in the future of telecommunications.

1 Source: TM Forum “Telco revenue growth: time for operators to place new bets?” (https://inform.tmforum.org/research-and-analysis/reports/telco-revenue-growth-time-for-operators-to-place-new-bets)