Genseven Agenda Toppers for Telecom Executives
High-Growth Trends: Seven Agenda-Toppers for Telecoms Executives
Mobile network operators in high-growth markets contend with a set of challenges and opportunities very different than those of their developed market counterparts. By André Levisse, Nimal Manuel, and Noppamas Masakee The priorities of telco top-managers in high-growth markets differ significantly from those of executives in more developed countries. The absence of fixed-line infrastructure, the preeminence of pre-paid subscribers, and the evolution of innovative business models all play unique roles in shaping these differences. Furthermore, emerging market players can earn outsized profits; based on ARPU (average revenue per user) levels as low as USD 5, some operators capture EBITDA margins in excess of 50 or 60 percent. McKinsey's longstanding work with telcos in emerging markets reveals seven major themes that head the agendas of most top executives in these high-growth markets (Exhibit 1).
Exhibit 1
Market dynamics lead to 7 priority areas for high-growth operators
1 Sophistication in the core
Managing for cash Growing revenues with marketing Regulation “Cost per Erlang” (Wireless) broadband Innovation spots
• Challenged operators – focus on liquidity • Healthy operators – focus on opportunities. Manage risks, review competitive opportunities and pursue M&A deals
2
• Sophisticated pricing activities – invisible vs. visible elements • Micro-market customer and distribution management • Marketing spend effectiveness • Economic impact of regulation • Stakeholder management • Regulatory organization • Reducing costs to less than 1 cent per minute • Improving utilization – increase number of minutes per BTS • Lean operations • Latent demand for (fixed) Internet, even in developing countries • Deploy 3G with smart network planning and go-to-market • • • • •
Mobile internet driven by large screen devices Social networking enjoying huge subscriber growth Mobile money: pioneered in
Mobile network operators in high-growth markets contend with a set of challenges and opportunities very different than those of their developed market counterparts. By André Levisse, Nimal Manuel, and Noppamas Masakee The priorities of telco top-managers in high-growth markets differ significantly from those of executives in more developed countries. The absence of fixed-line infrastructure, the preeminence of pre-paid subscribers, and the evolution of innovative business models all play unique roles in shaping these differences. Furthermore, emerging market players can earn outsized profits; based on ARPU (average revenue per user) levels as low as USD 5, some operators capture EBITDA margins in excess of 50 or 60 percent. McKinsey's longstanding work with telcos in emerging markets reveals seven major themes that head the agendas of most top executives in these high-growth markets (Exhibit 1).
Exhibit 1
Market dynamics lead to 7 priority areas for high-growth operators
1 Sophistication in the core
Managing for cash Growing revenues with marketing Regulation “Cost per Erlang” (Wireless) broadband Innovation spots
• Challenged operators – focus on liquidity • Healthy operators – focus on opportunities. Manage risks, review competitive opportunities and pursue M&A deals
2
• Sophisticated pricing activities – invisible vs. visible elements • Micro-market customer and distribution management • Marketing spend effectiveness • Economic impact of regulation • Stakeholder management • Regulatory organization • Reducing costs to less than 1 cent per minute • Improving utilization – increase number of minutes per BTS • Lean operations • Latent demand for (fixed) Internet, even in developing countries • Deploy 3G with smart network planning and go-to-market • • • • •
Mobile internet driven by large screen devices Social networking enjoying huge subscriber growth Mobile money: pioneered in