Telco to techco

The term “techco” is a recent buzzword that describes the shift of traditional telecommunications companies (telcos) towards becoming more technology-driven and innovative businesses. This shift is fuelled by rapid technological advancements and the growing demand for digital services.

The transformation of telcos into techcos illustrates the merging of telecommunications and technology. As the digital world becomes more interconnected and dependent on data, techcos are set to play a vital role in shaping the future of communication and innovation.

Modern telcos understand that in order to succeed in the digital era, they must focus on their customers and be agile enough to adapt to constantly evolving needs.

From telco to techco: Towards tomorrow’s telecom

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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 percent^1. 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Telcos should continually invest to avoid becoming outdated.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.

How KPMG can help

Working with your enterprise, operations, and technology development, KPMG Connected Enterprise helps you address a lack of customer centricity, siloed activities, disaggregated data and legacy technology systems that are no longer fit for purpose. With an agile mindset, KPMG professionals can assess and adjust your approach to help ensure it is right for your current needs and conditions.

KPMG professionals can guide you on where and how to begin your transformation journey and provide the support you need along the way. Everybody can benefit from the circle of value creation — from your organisation to your customers, to the wider ecosystem of partners, stakeholders, markets and communities.

Today’s businesses 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.

KPMG Connected Enterprise is one part of the Elevate. Connected. Powered. Trusted. approach to transformation.
Elevate. Can help you unlock value — efficiently. No matter where you are in your transformation and growth journey, we can help you achieve measurable improvements to revenue, operating margins, cost structures and working capital positions. KPMG Elevate can provide value, quantified and delivered.
Connected. Can help you transform to a digitally connected and customer-centric organisation, driven by data, enabled by technology and people, and ready to seize opportunities and reach new levels of performance and value.
Powered. Can help you boldly deliver functional transformation with leading practice operating models, processes and technology, while enhancing efficiencies, engagement, experiences and growth.
Trusted. Can help you seamlessly embed a balanced approach to risk and regulation into every part of your organisation, while securing the stakeholder confidence that enables responsible growth, bold innovation and high performance.

Whatever stage you are at on your transformation journey, KPMG professionals can help you find the right model and build the practical steps to get you there.

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)