Over the last 10 to 15 years, many communication service providers (CSPs) elected to establish an international presence, extending beyond their home countries and acquiring new subscribers and revenue along the way. This strategy – focused on high-value opportunities and growth – served CSPs well for almost a decade. However, today’s mobile market is virtually saturated, and CSPs continue to face increased competition from OTT providers. A deceleration in revenue and profit growth clearly indicates it’s time for a new approach.
Our research reveals that global CSPs have been unable to achieve a meaningful financial advantage over their single-market peers. This raises the question of what strategies and tactics global CSPs should adopt to improve their performance – and we believe the answer can be found through true globalization.
Most global CSPs operate as multinational enterprises, which conduct business in numerous countries, understand local customer requirements and cultivate local talent. However, such enterprises often suffer from redundancy and duplication of functions within their various countries. A globally integrated enterprise (GIE), on the other hand, gains business benefits from economies of scale and drives synergies for cost savings and innovative growth.
The reality is that the international CSPs are not nearly as globally integrated as they might be. To determine what barriers they face and how they can accelerate the benefits associated with a GIE structure, we conducted financial analyses on 15 on the largest global CSPs, as well as interviews with executives. We discovered that global CSPs are in a nascent stage in terms of leveraging economies of scale. In fact, only a quarter of executives interviewed believe their organizations are successful in realizing economies of scale.
The good news is that there are many opportunities to leverage global capabilities for further competitive advantage. To transform from multi-national companies into globally integrated enterprises, CSPs must develop and clearly articulate a global vision and operating model that achieves economies of scale, expands consolidation and drives continuous improvements. In doing, they become true global entities, agile and able to respond to this new era of global economics.
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About the authors
Global Telecom and Media & Entertainment Industry Consulting Leader
Connect with Bob Fox
Communications Lead, IBM Institute for Business Value
Connect with Rob van den Dam
Vice President, Communications Sector
Connect with Nick Gurney
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