In an exclusive joint interview with Ernst & Young Global Limited (EY), Telecom Review welcomes the expert opinions of EY MENA TMT Sector Leader Ahmed Reda and EY Global 5G Industry and Emerging Tech Leader Fuad Siddiqui regarding the region’s top trends, digital transformation demands and connectivity strategies, among their other valuable insights.
From your perspective, what are the top five trends that will continue to impact the technology and telecom sectors in the MENA region?
Ahmed: Telecoms are moving up the value chain to deliver comprehensive end-to-end digital services to businesses and consumers where the key drivers are demand from customers, digital business services market opportunities and future revenue streams. The sector is seeing multiple opportunities opening up due to the digitization of economies leveraging the telecom operators’ networks. Moreover, the changes in consumer behavior, driven by waves of digitalization, are opening up new opportunities in telecom services.
The top technology catalysts that can aid telecoms in their transformation towards delivering end-end digital services are mainly; 5G, Cloud, Internet of Things (IoT) and Cybersecurity. The 5G technology is a top priority for telecom leaders, and it is a game changer for the telecom industry due to the paradigm shift it is likely to bring to the industry. However, telecom companies are rethinking the scale and pace of their 5G investments due to concerns such as interoperability and sensitivity issues in network, reliance on third-party vendors and the broadened attack surfaces. Cloud technologies have become a key enabler for telecoms because of the wide array of benefits they offer. Telecoms are leveraging the cloud platforms to develop radically new value propositions that will create new business models and offer a whole new customer experience. Also, telecoms leverage IoT to deliver radically different solutions, such as connected cars, Smart City solutions and other IoT platforms for Industry 4.0, etc.
It should be mentioned that while telecoms are working hard to capture the market opportunities leveraging the above-mentioned technologies, they would need a paradigm shift from their “deploy first, protect later” mindset to a “shift-left” practice to consider cybersecurity aspects as early as possible in the implementation of these technologies.
The transformational power of 5G is evident in the MENA region. What more can be done by service providers to ensure that networks remain productive, resilient and scalable?
Fuad: Most service providers in the region have successfully launched their commercial and consumer 5G offerings. The bigger and more strategic opportunity is in the B2B and B2B2X segments. The enablement and digitalization of sectors – like energy, manufacturing, transportation, logistics and agriculture – is the new growth opportunity for telcos. However, the real test will be how service providers prepare and pivot. EY analysis shows a US$700 billion global opportunity by 2030, across some of the major sectors. Value capture will require the development of an integrated tech stack, including mission-critical secure 5G and edge cloud solutions with embedded AI; allowing the ability to extend these capabilities to enable improvements in these sectors through productivity gains and sustainability benefits is key.
There is already some early evidence of such business performance improvements in many of the sectors. For example, the World Economic Forum’s Global Lighthouse Network initiative showcases many enterprises across sectors who have seen benefits. To target this opportunity and enhance the scope and scale will require a different way of rolling out a resilient, reliable and secure architecture with open APIs that is modular and standardized, but with appropriate customization on a per-sector basis to support emerging use cases.
What is the best approach for integrating digital and customer experience for long-term value creation?
Ahmed: Digital transformation and integration are forcing companies to change their business models and adapt to the new market reality. This change is being driven by the customers themselves. Today, customers expect relevant content and service in relation to their needs anytime, anywhere and on any device of their choice. To keep up with this new kind of customer, businesses must embrace technology to deliver an unmatched customer experience.
Nowadays, customers often rate organizations on their digital customer experience first. Mobile apps, machine learning, automation and many others allow customers to get what they want almost exactly at the moment they want it. This has caused a shift in customer expectations, resulting in a new kind of modern customer. This new market reality forces organizations to change and embrace digital transformation as the center of their business strategy.
Digital requires one to rethink how to interact with customers. For B2B and B2C sales teams, digital means moving more to social selling. For marketing teams, digital means reducing the spend on offline marketing activities and using digital channels, account-based marketing and email marketing strategies. For customer service teams, it is all about being proactive in the way you help customers. Social media, review sites, forums and communities are all now part of the customer service ecosystem.
Everything is now happening in real time, which is why companies need to offer immediacy, personalization and accessibility to their customers.
From your perspective, what are the core strategies for ensuring that digital advancements are aligned with highly beneficial future use cases?
Fuad: One important dimension to ensuring the success of these use cases is building the capability and partnerships with ecosystem players. The 2022 EY Ecosystem Study found that 69% of business leaders credit ecosystem partnerships as a critical aspect of their success. Sectors in the region can further enable the creation and growth of new types of companies by leveraging these partnerships. Looking at the telco sector, we are seeing strong momentum, with some establishing partnerships with hyperscalers. Some telcos have also started partnerships with AI/ML companies. In some global cases, telcos have even acquired or invested in ecosystem partners. This is an important consideration from the enterprise client perspective. In the EY Reimagining Industry Futures study, 73% of the executives surveyed want to prioritize suppliers who can provide relevant ecosystem relationships.
Transforming the Saudi 2030 Vision and other national goals into action, how can telecom players remain competitive yet collaborative in delivering their products and services?
Ahmed: Guided by Vision 2030, the telecom industry within KSA has taken a big leap. Liberating and regulating the sector as well as introducing many new players have taken market competition to a new level. However, the sector recognizes that collaboration with competitors is crucial in order to cope with pressure on profit margins and build a strategic advantage.
Increased competition continues to reduce margins, while consumers demand more sophisticated services at lower prices. On the other hand, telecom operators must comply with regulatory licenses that impose network coverage in unprofitable areas, allowing OTT applications and many other market liberation regulations that impact profitability.
To combat these pressures, telecom operators are considering how to find ways to cooperate by sharing all or part of their largest expenditure areas with competitors. We have seen many initiatives to share network infrastructure costs, radio towers, data rooms, etc.
With 6G already in talks, while 5G is being widely deployed, which strategies should the technology and telecom sectors follow to maximize connectivity opportunities?
Fuad: By 2030, we will be entering the 6G era, an era of ubiquitous intelligence enabled through a web of interconnected sensory networks that will transcend geographic and technological boundaries. Industry adoption of advanced 5G and associated tech architectures that offer decentralized edge cloud infrastructure and native AI are important prerequisites and are required as a foundation for many other emerging opportunities. 6G will offer extreme connectivity, connecting and federating data across future metaverses and offering a distributed compute infrastructure for Web 3.0. 6G will extend these capabilities with new reach, scale and reliability. Whilst advanced 5G is enabling the fusion of our cyber-physical lives across consumer and industrial domains, 6G will encompass this and add a new dimension by integrating a cyber-life or cyber-human aspect.
Innovation is at the forefront of today's era. How can the MENA region keep up with the ongoing digital transformation demands from consumers and businesses?
Ahmed: Telecoms should set their sights on innovation. Modern product development is key here as it focuses on fast, adaptable development and future-facing projects. It’s also essential because it focuses on building a product around the customer. If there’s any lesson to be learned from disruption, it’s that success lies in meeting changing customer preferences quickly and effectively.
Over the last decade, telecoms’ revenue was either shrinking or weakly growing. This can be explained by the slow or no action against changes in the market. We saw major transformation in mobile technology, the rise of mobile apps, changes in customer behavior and new competition from OTT players, putting big pressure on telecoms’ core offerings.
One of the obvious answers for the above challenges is to push for innovation. This means tapping into new technologies, platforms and consumer preferences while acting quickly on the opportunities each one presents.
Some of the areas that telecoms need to invest in to stay competitive in the digital era are: embracing OTT services, leveraging data and enabling the IoT applications. Music, movies and TV are increasingly consumed online, introducing a huge opportunity for revenue growth. Tapping into big data is a rising trend where telecoms have access to huge amounts of data waiting to be leveraged, and many companies could use this data for advertising, predictive network maintenance, credit scoring, etc. IoT applications are countless and can introduce new opportunities in areas such as smart cities, energy management and many other industry 4.0 applications.
How can cellular and emerging technologies be utilized together to shape the growth and transformation agendas within the region?
Fuad: The region has some dominant sectors like oil & gas, energy, transport and logistics that have embarked on their respective digital transformation journeys. By bringing together an end-to-end business and tech stack, consisting of a suite of emerging technologies like 5G, edge clouds, robotics, embedded AI and quantum security, while hashing out the opportunity this presents across sectors, industries can be helped and benefit from reimagining how they currently operate and how they can operate in the future. EY, together with leading energy sector companies, is pioneering this model by looking at how to transform the way refineries, pipelines and terminals operate but also offering such expertise and capabilities to other sectors. Additionally, a specific initiative like KSA Vision 2030 offers a direct role for emerging tech to future-proof ICT infrastructure investments across both public and private services. One example is the diversification agenda, which includes growth in the agriculture segment. This approach is already changing the way vertical farming is being designed and operated. In smart cities, these emerging technologies will [present] a new way that public safety and citizen services are being offered.
