Unlocking Growth Beyond Connectivity: Insights from Telco Growth 2024

Operators are also grappling with high capital and operational expenditures. The first wave of 5G investments from 2019 to 2023 required significant capital. As we move into 5G advanced stages, further investments are imminent. Additionally, operating expenses, particularly energy costs, are substantial, with global operators expected to spend over $2 trillion this decade.

Given this financial scenario, operators must diversify their services beyond core offerings. GSMA research shows that over half of the operators surveyed view these additional services as the primary drivers of revenue growth. This diversification is not just an option; it is a necessity.

Technology advancements offer operators a tremendous opportunity to build digital services on their existing networks. Customer demand for more immersive digital experiences and enterprise digital transformation are also key drivers.

When we talk about services beyond core, we refer to a wide range of new opportunities. For enterprises, these include smart cities, metaverse, professional services, big data, drones, and cloud services. For consumers, digital payments, commerce, digital health, entertainment, education, and smart home services are emerging areas.

Since 2017, we’ve tracked the revenue contribution from these services, and it's promising. The average revenue from these services among major operators has increased from 18% in 2017 to 26% in 2022, showing positive trends across the board.

The transition from traditional telecom to digital telecom is inevitable. Operators are already on this path, and those who haven’t started must do so now.

The value of new services lies not only in making a hyper-connected society but a better society as a whole. Smart concepts are about creating an impact without drastically changing user habits. For instance, with a smart home app, you can manage resources efficiently even if your routines remain the same. This digital transformation fosters responsibility and can significantly impact our communities.

Waste management in smart cities is a prime example of this impact. Efficient waste management not only optimizes resources but also provides a sense of accomplishment and satisfaction. IoT's true value lies in transforming data from sensors into actionable information.

The three pillars—citizens, local authorities, and businesses—must work together to bring about this change in a society through technology. Connectivity drives change, but the services built on top of it can transform our behaviors and societies. It's about being current, sustainable, and leaving a better world for future generations.

However, telecom operators can play a crucial role in this ecosystem. While some may deny the risk, others see the opportunity to resell LEO services or even launch their own constellations. Operators' expertise in local regulations, connectivity, and infrastructure is invaluable to LEO providers.

GEO satellites will persist, but their commercial viability is questionable. LEO's rise presents opportunities in subsea connectivity, regulatory support, and market integration. As technology evolves, operators must adapt to remain relevant and embrace the LEO revolution.

There are two main use cases for a modular approach in Telco: customizing for different customer segments and customizing for different countries.

First—customizing for different customer segments. Imagine a mobile operator wants to target Gen Z. It’s a younger audience with specific needs, more open to new things. There's more space for creativity in design and service, so it makes sense to launch a new app for Gen Z subscribers. If the main app is standard, launching a new app from scratch takes time and effort. With a modular platform, an operator customizes modules and wraps them in new branding.

Second—customizing for different countries. Imagine a telco operator enters a new foreign market. This country has local privacy laws or payment methods. Instead of building a new app from scratch, the operator customizes the profile and payment modules to meet all the local requirements easily.

These are just a few examples applicable to telcos. Some operators have mobility services, email services, cloud storage, promotions, cybersecurity services, loyalty programs, post services, streaming services, city services, you name it. It's up to you to define the modules.

There are three key benefits of a modular approach? First, faster development—a modular approach allows the team to work on different modules simultaneously, saving up to 30% of development time. Second, easier scaling—one team builds a module once and then adapts it for new segments and regions, reducing time to market. Third, lower costs—one team can handle development and support, saving significant resources for the company.

The modular approach is a game-changer for telecom operators aiming to expand beyond their core markets and audiences. As the digital landscape evolves, embracing modular apps will be essential for telcos to stay competitive, deliver personalized experiences, and unlock new revenue streams.

You can read more on the modular approach to developing digital products in our Telco-to-Techco guide.