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Growth Strategies

The Next Frontier For Telcos: Embracing Innovation Through Purpose-Led Value Propositions

Image credit: Shutterstock
Chief Marketing Officer, Democrance

Nearly every traditional industry has faced some form of disruption in the past decade, and the pace of change is picking up. The telecommunications space has been one of the most impacted, with over-the-top (OTT) players offering services directly to consumers via the internet. Innovation has led to telcos seeing intense pressure on their core business –local and international voice calls and SMS– while revenue growth remains led by data services.

Many players are now defending their businesses while trying to enhance the customer experience through digital transformation. A PwC 2017 Telecommunications Trends report revealed that the average revenue per user (ARPU) in the telecommunications industry has been falling in nearly every region. Having faced stagnation in the past few years, telcos are exploring opportunities across verticals to diversify revenue streams.

Partnerships can become the foundation for telcos to innovate. They could seek out companies with similar goals to build synergies with, instead of looking to reinvent the wheel for each new product or service.

An example of a great collaboration resulting in product innovation is the UK-based virtual mobile network Anywhere Sim. The company partnered with multiple networks in the EU to enable users to roam seamlessly through connecting to any available network automatically. Across different verticals, there have been instances of telecommunication firms and financial institutions converging to provide mobile financial services (MFS), which has witnessed an especially high uptake in emerging markets with unbanked and low-income segments.

In the UAE and across the Middle East, capitalizing on telcos’ broad reach makes particular sense due to the high mobile penetration rates. For example, the UAE boasts 230 mobile subscriptions per 100 inhabitants in the first quarter of 2018, according to the Telecommunication Regulatory Authority.

But, of course, not all partnerships are made equal. Telcos need to leverage synergies that present a new value proposition to differentiate their offerings from competitors. To stand out, telcos need to consider how to address another dimension of the subscribers’ lives, in a way that builds loyalty and reduces the churn rate.

Beyond business advantages, partnerships that lead to improving communities and encouraging inclusion can help telcos enhance their public image and further cement their relation with their subscribers. Many companies are now looking past corporate social responsibility and leaning towards authenticity and purpose to engage stakeholders. Integrating social impact into the competitive strategy can make all the difference, and align values between the company, consumers and stakeholders.

Insurance technology (insurtech) firm Democrance is a prime example of what tie-ups can accomplish. The Dubai-based company aims to create unique partnerships between two unlikely industries –insurance and mobile network operators (MNOs)– to offer microinsurance to low-income segments via the mobile channel. Mobile subscribers, regardless of their income group, need only a mobile phone to buy, use and make claims for their insurance product. For telcos, this presents unique opportunities to diversify their revenue streams and increase the ARPU all while enhancing the customer lifetime value.

Admittedly, forging strong partnerships is not an easy task. It requires choosing the right partner, setting the right parameters and developing relationships that go beyond contracts. But for industries that are facing stalled growth, perhaps it is time to try a different approach- preferably one that is purpose-driven.

Related: Startup Democrance Makes Insurance Accessible For MENA's Low-Income Population