Helping telcos control costs is a $126 bn opportunity

by CXOtoday News Desk    Jan 22, 2013

Telco OpexTo offset relatively flat revenue growth over the next five years, telcos must continue to focus on cost control. Additionally, telcos have the potential to gain greater economies through their global vendors in terms of network rollout, network operations, network optimization, customer experience, and service quality management.

According to a new research, Ovum forecasts just a 2 percent annual growth in telco revenues between 2012 and 2018, as carriers struggle with increased over-the-top (OTT) competition, end users more interested in buying devices and apps than services, and limited customer appetite for usage-sensitive billing. As a result, telcos are keeping a tight lid on capital expenditures (capex), but this is only part of the story, as Matt Walker of Ovum explains, “Service providers will keep a tight rein on their capex budgets, but they do need to spend heavily on technology – both their customers and the competition demand this. What’s changing is that operators are more smartly attacking their operating expense (opex) budgets, which opens new opportunities for vendors.”

However, to meet operators’ needs vendors will have to develop far more complex solutions for carriers than in the past. Carriers need help monetizing their networks and retaining customers, not just deploying the equipment, as Walker further explains, “To take full advantage of this growth opportunity, it’s crucial that vendors have a true understanding of telco opex – something, which until now has been complicated by the lack of granularity and consistency in carrier financial reporting, amongst other barriers”.

Ovum’s newly created taxonomy of opex segments across all operators reveals network/IT operations account on average for 18 percent of telco operating costs, of which 60 percent (US$126bn) is for spending internally, mostly using salaried staff.