Telecom Lead India: The mobile telecom sector has seen much upheaval in the wake of 2G spectrum scams, consolidation of tower business and court cases by foreign operators. Simultaneously, there was somewhat lukewarm response by customers in terms of VAS.
If we classify, the challenges faced by mobile telecommunication business in 2012, than they could be broadly brought under four categories:
1. Compliance with regulator
4. Customer Related
Compliance with Regulator
Uncertainty over regulator’s approach to new market structure continued to undermine operator’s willingness to invest. It is increasingly crucial for government and regulator to adopt pro-investment policies to sustain the sector’s momentum and for operators to form workable stances on a range of issues. Cancellation of 2G spectrum allocation resulted in exists of foreign operators like Elitasat and Telenor. There was tremendous confusion over fresh investment in those circles where licenses were revoked. The operators, who were not affected, but yet held back their investment plans. The coming year may prove to be watershed in terms of achieving clarity over regulatory approaches. During the current year, operators failed to consolidate data services, which resulted in stagnated revenue with voice services. Even now, besides metro and ‘A’ class cities, availability of high speed data services remained a dream for majority of cities, trunk routes of highways and railway network. Customers continued to face privacy and security issues due to anti terrorism measures and mobile malware attacks. Operators need to work closely with government on these issues and collaborate with suppliers and partners to tackle privacy and security issues in new services such as cloud security and mobile apps.
Insufficient information to turn demand into value, lack of organizational flexibility and poorly formulated M& A and strategic partnerships hit the top line of operators during the current year. To drive profitable customers prepositions and improve their time –to-market for new services, operators need accurate, timely and comprehensive business intelligence and customer analytics. However, operators failed miserably on these fronts. Despite immense popularity of smart phones with customers, they were mostly deprived of VAS at affordable pricing and data speed. M&A and strategic alliances either failed to materialize, as was the case with GTL and Reliance or resulted in poor year on year financial results, as was the case with JAIN and Airtel M&A.
Financial Growth – Failure to shift the business model from minutes to bytes, disengagement from the changing customer mindset, and lack of confidence in return on investment and failure to define new business metrics saw stagnated financial growth in year 2012. As value shift s from minutes of usage to volumes of data, operators need to move away from their legacy strategies focused on customer retention. With global technology brands now top of mind for customers and technology cycles leapfrogging, operators need to understand and respond to fast changing customer expectations. Operators need to focus in investment commitment in growth opportunities by becoming technology trend setters for customer demand. The metrics and key performance indicators have not kept pace with the shift in business models from voice model to data model as many internal metrics are still service and network oriented. Operators need to also define new set of metrics because ARPU fail to give a full financial scenario to investors.
While operators constantly moved the customers from scratch cards to smart recharge to online recharges, failure to bring mobile apps on operator’s website , premium services, post paid billing, ask me services , do not disturb directory adherence to avoid pesky calls and hassle free number portability; continued to be thorny issues . Another legacy strategy of operators that have focused on retaining customer’s loyalty rather than monetizing demand needs to be addressed. Instead of concentrating on fighting churn, the operators should now raise their sights to target revenues through new services that tap in to rising demand. The massive ad campaigns in fact proved to be counter-productive when promised services were actually not satisfactory.
The coming year can be a year of opportunity if operators mend their ways and focus to remove hurdles which became challenges during the current year. Significant growth can be witnessed with their organizational structures aligned to the issues of data services, customer satisfaction, considered investment and technological improvements. This is the time for business units to maximize the economies of scale and scope in their geographic footprints while reconciling the competing forces of geographic sensitivity and global strength. While tackling the present challenges, operators need to understand that some issues like more pressing green agenda, managing debt and cash ratio and concentration of equipment vendors which are currently below threshold, will raise their head in very short future and pose challenge. They would do well to initiate step to mitigate them today rather allow them to become challenges.
By Goutam Chatterjee, director and professor at Trinity Institute of Technology & Research
The pix for the article is sourced from argeltiburcio.com