Most Western European mobile telecom markets have reached a high level of maturity and present a similar competitive outlook: they are markets with stagnating revenues and where well-established leaders with a steady market share are competing with MVNOs (Mobile Virtual Network Operators) that are now plateauing after their appearance over a decade ago.
In this context, the rising digitalization across industries has allowed the entrance of e-tailers and retailers in the telecom market, totally changing the telco distribution arena. In addition, on the demand side, the instant gratification expectations from customers and consumer polarization, as a result of a growing base of digital natives and older population, will add even more uncertainty to the future scenario.
Based on this, our paper presents recommendations to deal with three plausible scenarios for the telecom market in 2025, depending on the level of disintermediation in the supply chain:
- “Digital differentiation” scenario: disintermediation has steered away from its current trend. However, digital excellence is now essential in order to compete in the market and the physical presence of sales channels has significantly shrunk.
- “Cornerstone enablement” scenario: by 2025, telco operators have been able to conquer adjacent domains and provide offerings beyond connectivity. Some of these newly entered domains benefit from physical presence (banking, security, etc.). Now customers perceive a telecom operator as a cornerstone where digital excellence and physical availability are complementary and crucial to create market advantage (i.e.: in a similar manner as Amazon acquiring Whole Foods).
- “Commoditized connectivity” (tick-in-a-box) scenario:disintermediation has dramatically affected the industry and derived from this effect, telco operators’ offering is now just another building block for other distribution players. As a result, telco players have moved their offering into e-markets where consumer electronics and e-tailers leverage connectivity as a “tick-in-a-box” when selling. Telco operators are now fully focused on searching for efficiencies and sales channel efforts are focused on influencing e-tailers.
As telco markets are moving towards any of these three scenarios, telco operators will need to decidedly review some of their fundamentals. Thus, strong leadership to assure a rapid evolution to develop a “digital differentiator” will be required. Additionally, this paper concludes that telco operators in Western economies would need to face the following key activities regardless of the final disintermediation scenario:
- Attract and empower digital talent.
- Substantially downsize physical channels while maintaining key strategic positions.
- Set-up real ecosystem management capabilities to shape partnerships.
- Commit to the most adequate commercial strategy depending on the scenario and lead the change.