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How EY can Help
Conclusions and next steps
As telcos move forward with their transformation agendas, they should reconsider the foundational elements of their programs. Incremental improvements relating to network quality, customer experience, internal skills and digitization will still have a vital role to play. However, a more holistic and ambitious mindset that considers new points of differentiation, a clearer sense of organizational purpose and an evolving value chain position that considers adjacencies in infrastructure and software will be essential if they are to maximize long-term opportunities to create and enhance value. Key steps include:
1. Reimagine the business model
Product simplification is an important route to greater efficiency but should not be a strategic end point. There is scope to overhaul business models, which can help widen addressable markets and counter disruptive threats emerging from outside the sector without over-extending the solutions portfolio. Exploring more wholesale-oriented concepts, such as network-as-a-service, supported by emerging technologies such as generative AI (GenAI), will have an important role to play going forward.
2. Look for new differentiators
Many operators still only trust network quality as a differentiator, even though they recognize that in-market network quality gaps between competitors are diminishing, challenging the average revenue per user (ARPU) uplift available through infrastructure upgrades. It is critical to seek new points of differentiation — from AI and Environmental, Social, and Governance (ESG) credentials through to network APIs — in order to position for long-term growth and break the reliance on new network upgrade cycles.
3. Evolve the employee proposition
The demand for younger talent with digital and software-based skills is one of the strongest sentiments emerging in the survey. Yet, new skills and retraining will provide only short-term benefits unless they are accompanied by more pervasive transformation of organizational purpose and employee proposition, which will build a more sustainable talent pipeline. Internal collaboration should be an ongoing focus, particularly as new thinking enters the organization.
4. Improve your ecosystem relevance
Partnering and ecosystem strategies require greater prioritization. Hyper-scalers are a growing example of a “frenemy” that offers new growth opportunities alongside disruptive risks. Exploring new value chain positions —supported by innovative ownership positions in legacy and adjacent markets — will help redefine the growth horizon for telcos. Better engagement with the developer community and industry verticals can help unlock and serve new demand scenarios.
5. Prepare for new market structures
More telcos agree than disagree that the structure of the industry will change dramatically in five years, with a split of NetCo and ServCo capabilities. Exploring new operating models and organizational structures can help combine skills in new ways and also prepare for more radical “sell and separate” initiatives that are driven by business logic and not short-term financial gains. At the same time, it is critical to consider new consolidation scenarios as regulatory views change and new “scale-up” opportunities appear.