People
Telcos, particularly the mobile-centric players, are now shifting gears and investing significantly in the B2B business. In the past, the B2B segment could not get its fair share of attention and investments, even though it created solid profit pools. We see three reasons for this change:
1. B2C growth has been stagnant and 5G monetization there has been elusive - telcos are under pressure to find new growth sources.
2. Threat from hyperscalers as they are become increasingly relevant in private networking and quickly deliver software and cloud-based services (such as VPNs, traffic shaping, security etc.,) that telcos traditionally would provide through hardware and with long lead times.
3. Finally, there are clear growth opportunities as the industry verticals go through the digital transformation wave.
Here in APAC, there is a significant opportunity for telcos to grow B2B - particularly along the B2B2C vector.
(Source: Twimbit, 2022 data)
Key shifts needed
Growing B2B is, however, not straightforward, especially for mobile-centric players that have had their operating models geared towards serving mass segments. A few shifts along the value creation stages include:
What determines success on this journey?
Value orientation: Services ideas and use cases, in our view, are commodity. In recent months, a number of 5G B2B use cases have made it to the press and generated buzz. However, a number of them may not see commercialization or will likely remain in niches due to better service quality / reliability of fiber or the use case can be delivered by WiFi6 with low complexity. Therefore, testing the business case rigorously with a Private Equity lens is paramount - i.e., why the customer will switch, what other low cost / complexity options does the customer have, how many such paying customers exist in the market etc. Further, taking a sprint based approach to feature development helps arrive at product constructs that are more in tune with the market.
Analytics and digitalization: Telcos have been progressing well on using digital approaches to marketing, sales and customer support activities for the B2C segment. They will now need to quickly pivot to the B2B side and build similar maturity. The bar on B2B is already set high - IT teams in these enterprises are exposed to the advanced capabilities of the hyperscalers (robust predictive models, seamless self-service portals and drill-down analytics capabilities). Therefore, telcos will need to clearly raise the game on this front.
Delivery excellence: Converting initiatives on paper to tangible P&L impact is a capability that many companies struggle with. As telcos embark on this transformational journey, they will need to continuously prioritize for value, drive changes in parallel (organizational, product / technology and processes), clear dependencies, and track the outcomes that matter. Collaborating with external stakeholders (technology partners, channel / delivery partners etc.) seamlessly on the initiatives is also essential.
Conclusion
The stakes for raising the B2B game have never been higher. In particular, the mobile-centric operators now have an opportunity to leapfrog the incumbents in their respective markets. Telcos that get this transformation right will be able to increase their service footprint at low marginal cost by leveraging public cloud infrastructure and digital delivery models. It is an exciting time for telco B2B organizations!
If you'd like to learn more about how we at AlixPartners can help B2B telco organizations, particularly on the success factors above, please get in touch.
