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Telco Groups Sitting on Pots of Gold

Large telecom groups with multiple properties have great potential for efficiencies

A new type of gold rush is on for large telecom groups with multiple properties.  The Zain Group, in a news release from Mobile World Congress last week, announced that they too are in the rush for gold.  According to Chief Executive Officer Nabeel Bin Salamah, "Zain is aiming to achieve the highest levels of synergies amongst its operations in the Middle East."

Realizing efficiencies from synergies among a company's several operations is the gold pot that Convergys research shows over 50 telecom groups are sitting on. Further analysis of these 50 telecom groups shows, on average, that each owns a partial or complete stake in 12 properties; just 20% of them hold almost 60% of group held operations, and about 15 groups have more than 20 properties each.

In today's world, most of these individual operations make technology investment and procurement decisions in a decentralized fashion, and surely there are benefits in that structure.

But just imagine the wealth that could be reaped by the largest of the wireless telecom groups, which has 43 operations, if they operated in a centralized rather than decentralized fashion.

Here's an example of the difference when undertaking a CRM platform transformation:

  • Decentralized:  Each unit dedicates at least 10 full-time resources to do this, which is a total of 430 resources globally.  Each unit goes through a detailed process of vendor assessment, proof of concept, proposal assessments, etc, for a period of three months, which is a total of 30 man-months at each unit, summing to a grand total of 1290 man-months of the group. Surely they will all have their own preferences for different vendors, and let's assume the group ends up signing contracts with 10 vendors across 43 properties.
  • Centralized:  This group would have deployed about 50 resources maximum, spent about 12 months going through the process and ended up with one or a maximum of two CRM solutions or vendors. That is a savings of 380 resources, 690 man-months, and a very impressive price point through their extremely strong bargaining power.

This is just one example.  On top of this, consider the benefits the group would leverage from a single system not only in a single operation, but also across all their global properties. The added advantage of identifying a roaming customer; the ability to make fiercely competitive global offers; customers having seamless experience regardless of national boundaries; and so much more. And then there are technological advancements like cloud computing, which are offering further potential to uncover such benefits.

I've discussed more about this in an article on page 28 of Mobile Communications International at http://tinyurl.com/8yc7luj. These are just a few examples of how large telecommunication operators can become more efficient and surely the opportunity pool is vast.

This is a great opportunity for telecommunication companies, and is an imperative as well. The continuous drop in roaming prices forced down by the regulators, declining ARPU's due to consumers cutting back on their spending in the wake of economic recession, intensifying competition not only from peers, but also from a new breed of service providers - the OTTs (over the top players), are just a few examples of the tough challenges in the market that are causing revenues to decline and margins to shrink. And when it comes to creating value for share holders, revenues and margins are top priority.

Zain Group recognizes these market challenges, and acknowledges the opportunity in front of them across their properties in the Middle East. The other telecommunication operators are in a similar situation and should work towards uncovering their pots of gold.

More Stories By Mohammed Sha

Mohammed Sha is the Director of Product Marketing at AsiaInfo-Linkage, the supplier of the world's most advanced software solutions and IT services to the telecommunications industry.