Major telecommunication providers across the globe are undergoing radical change due to the dynamic nature of the modern, corporate world. These companies are broadening their identities from being traditional telcos to evolving into "techcos." This shift enables them to stay current and flourish in the digital age. For continued success, this transformation represents more than just a name change. This development has significant implications for the business strategies, customer relationships and operational procedures of these organizations.
In previous years, the primary focus of the telco industry was on the delivery of voice and data services. The provision of communications infrastructure, including wired and wireless networks, was vital to their operations. While this strategy was effective, it became apparent that in a world where technology rapidly reshapes every industry, depending solely on providing communication services would not remain sustainable.
Reasons for the Transformation
According to STL Partners, several driving factors contribute to the ambition to evolve from a telco into a technology company or "techco." To begin with, investors and stock markets typically place a higher value on techcos than they do on traditional telcos. This divide stems from the widespread perception that techcos are more likely to succeed in the long run due to their greater potential for development and flexibility.
Secondly, tech companies are notably agile, allowing them to quickly adjust to new market conditions and capitalize on opportunities as they arise. Technology companies are known for their strategic agility, which allows them to respond quickly to opportunities and threats.
The introduction of 5G technology is a major driving force behind transformation in the telco industry. Conventional business models used by telcos have been increasingly fragmented over the past decade, posing new problems. As a result, top executives are considering a significant shift toward a more adaptive, technology-driven strategy.
Heavy investments in research and development as well as network deployment are hallmarks of the global rollout of 5G networks, which in turn requires a substantial rate of return. The potential of 5G technology doesn't just revolve around higher data transfer rates; it also extends to unlocking previously unexplored markets, notably in the realm of B2B enterprise services. As 5G, edge computing and private networking converge, telcos will have more opportunities to offer cutting-edge services to many sectors of the economy.
Examples of the Telco to Techco Shift
In Asia, several large corporations have shown remarkable success after adopting the techco transformation.
One prominent example is Indosat Ooredoo Hutchison. The tremendous progress made by Indosat after its merger with Hutchison 3 Indonesia was a notable achievement among the telcos. With more than 100 million subscribers as a result of this strategic decision, Indosat is now the country's second-largest mobile network operator.
IOH’s CEO, Vikram Sinha, stated that as Indosat moves forward into the digital age, they are not merely becoming a telco, but rather a techco, which demands adaptability, expert training, and originality in the face of pressing challenges.
In the Philippines, leading digital solutions platform, Globe, is also accelerating its transformation, constantly in search of the next major challenge towards digital enablement and transformation.
As the largest mobile provider in the Philippines in 2016, Globe marked the beginning of its transition from telco to techco. The company's success pushed it to broaden its focus to include digital solutions. Now, Globe has established businesses in digital marketing solutions, startup finance via venture capital, telemedicine, e-commerce, business process outsourcing, advertising technology, educational technology, media production and even solutions within the entertainment industry.
Challenges in the Transformation
The transition from telco to techco presents exciting new possibilities, but it is not without challenges. The process of incorporating cutting-edge technology into an established framework is notoriously difficult and expensive. Maintaining compatibility between systems is essential for a smooth migration. Moreover, when telcos expand into new markets, they face stiff competition from established technology companies. This can make it tough to break into those fields.
The transition from telcos to techcos reflects the constantly evolving landscape of the technology market. These businesses are expanding beyond the provision of mere communication services into other sectors powered by technology. This includes content, digital media and IoT. Businesses can use the power of technology to create a better, more connected, and more innovative future for everyone.
