While traditional forms of communication, primarily centered around connectivity, have historically generated the bulk of enterprise revenue, a range of additional services have emerged as crucial drivers of growth in the B2B sector. These encompass areas such as the Internet of Things (IoT), private networks, cloud computing, security solutions, automation and data analytics.
This shift indicates that there is still untapped potential for expansion beyond the established core offerings, particularly within the realm of B2B, where the ongoing digital transformation of enterprises is propelling advancements.
According to findings by the GSMA, the year 2020 witnessed the value of services extending beyond the conventional core (encompassing both B2B and B2C domains), amounting to approximately $200 billion in revenue for the evaluated operators. This data underscores the tangible diversification of revenue streams among operators.
The enterprise sector is serving as a catalyst for revenue growth as operators strategically aim to facilitate the digital evolution of various industries. Services that go beyond the conventional core are progressively being bundled into comprehensive solutions for enterprise clientele. This integrated approach responds to the escalating demand for digital solutions and supplementary value-added services.
The positive impact of this trend on business revenue growth has been consistently evident, with operators experiencing a gradual and promising upswing. The realm of telecom and IT-driven B2B services can be classified into four primary categories: connection-based services, non-connection services, innovative digital services and the expansive domain of IoT.
Connection-Based Services
Allied Market Research has projected that the value of 5G B2B endeavors in the Middle East will reach $297 million by 2028. As a testimony to this, within the first quarter of 2023, Zain KSA announced a remarkable seven-fold surge in net profit, primarily propelled by the expansion in B2B and 5G advancements, among other supporting factors.
Furthermore, BT, Deutsche Telekom and Verizon have observed a notable rise in subscriptions for business mobile handsets over recent years, particularly following the onset of the COVID-19 pandemic. The demand for mobile handsets from businesses has risen in numerous countries to accommodate the needs of remote and hybrid work settings.
Despite the rapid growth in revenue from broadband fixed wireless access (FWA) services projected between 2022 and 2027, data predictions indicate that this will constitute less than 1% of the overall revenue from enterprise mobile services by 2027. This incremental revenue is expected to be primarily driven by the adoption of SMEs.
On the other hand, the proliferation of private wireless networks offers a strategic avenue for capitalizing on the potential of 5G within the enterprise sector. The escalating demand for private wireless solutions is also attributed to the digital transformation initiatives undertaken by major corporations, particularly within industrial premises like factories and warehouses.
A survey by GSMA Intelligence revealed that approximately half of the operators anticipate that private wireless networks will account for over 10% of their total enterprise revenues by 2025. This projection holds true across operators of varying sizes and geographical regions. The contribution of private wireless networks to operators' enterprise revenue is anticipated to rise during the latter half of the decade, facilitated by the increased availability of private 5G network equipment and compatible devices.
In a bid to provide enhanced services, du has chosen to deploy Nokia’s Multi-Access Gateway (MAG), enabling the delivery of broadband services to both residential and business users via 4G/5G fixed-wireless access in conjunction with conventional mobile services. Conversely, etisalat by e& has successfully showcased the potential of the 5G Portable Private Network MEC, introducing a 5G-based alternative to traditional Virtual Private Networks (VPNs). This innovation enriches the remote work experience among UAE enterprises. Adding to these advancements, Zain KSA and AWS have collaboratively completed a trial of a 5G private network, signifying a significant milestone in the deployment of cloud-native infrastructure to cater to the needs of enterprise customers across the Kingdom.
Non-Connection Services
The pursuit by telcos of more comprehensive strategies has led to increased costs for media content, leading to the acquisition of content developers or the formation of partnerships with OTT service providers. As an example, stc Group's Center 3 has the goal of establishing a digital hub with media centers for data storage and processing, among its essential components.
Telcos are also increasingly capitalizing on advertising and data services for media firms, which has become a noteworthy revenue stream. They have the potential to offer consumer insights to media and advertisers and can facilitate targeted, segmented TV advertising. This capability could potentially grow to encompass all digital ecosystems.
Another avenue of opportunity involves telcos transitioning into multiservice operators. This entails diversifying beyond telecommunications and leveraging data to participate in sectors like energy and insurance. Leveraging databanks and home-assistant services as a foundation allows telcos to interconnect various services using customer data.
Telcos can also aid third-party businesses, like stc's expansion in digital consulting post-Devoteam deal, strengthening its role in digital transformation.
Moreover, telcos play a vital role for enterprises seeking communication/collaboration platforms. Bundling UCC with network services and technical support is appealing, especially for SMBs that value managed services. Singtel launched Zoom's solutions for enterprise digital transformation in Singapore, while Vodafone partnered with RingCentral for unified communications, starting in the UK and Germany and expanding to Italy and more markets later.
Digital Services
In 2023, telcos are striving to position themselves as cloud advisors and industry leaders for their enterprise clients, encompassing both business and IT stakeholders. While the focus remains on enabling enterprise cloud adoption, there's a growing emphasis on aiding customers in shaping their future cloud strategies and developing solutions to maximize business value.
The evolution of big data and cloud services is expanding enterprise needs into new domains. This expansion will propel revenue from enterprise mobility, covering aspects like mobile device management and mobile content management. This sector is projected to generate around $700 million in additional global revenue until 2027.
While automation will remain pivotal, telcos will also undertake strategic cost optimization measures such as core network sharing and network slicing as well as forming partnerships with webscale cloud providers. These endeavors have the potential to impact multiple cost areas.
Indeed, cloud transformation presents a significant global opportunity for telcos. Leading telcos are expanding their professional and managed services in this domain, focusing on hybrid multi-cloud solutions for their major enterprise clients. The rise of stand-alone 5G core networks is aiding cloud providers' penetration into the telecom sector.
A recent collaboration combines Informatica's robust cloud data management solutions with e& enterprise's industry expertise, specialized solutions and integration skills. This empowers UAE organizations to achieve data-driven digital transformation outcomes.
In a prior acquisition, ZainTech's CEO Andrew Hanna highlighted the alignment of Adfolks' portfolio (encompassing AI, cloud, cybersecurity, drones, IoT and smart city tech) with ZainTech's B2B capabilities, enhancing value for enterprise clients.
Additionally, Zain and du have established a strategic partnership, underscoring the telcos' growing focus on business clients and eco-friendly networking. This collaboration coincides with a rising trend of businesses and government entities leveraging digital services — particularly data analytics and automation — for operational transformation and optimization.
Expansive IoT
IoT connectivity is projected to contribute to more than 50% of the additional revenue that operators will gain from enterprise public network mobile services in the next five years. This firmly establishes IoT's position in the enterprise market. Operators should maintain consistent investments in their IoT divisions to fully capitalize on their previous efforts. In terms of numbers, IoT connectivity services for enterprises are set to drive over $4 billion in revenue growth for operators from 2022 to 2027.
China Telecom and stc have entered into a Memorandum of Understanding (MoU) to concentrate on IoT prospects. The core objective of this agreement revolves around strategically advancing IoT industries, with a particular focus on connected car initiatives in Saudi Arabia.
Also in the Kingdom, iot squared is furthering its commitment as a national IoT leader through the acquisition of Machinestalk. They are dedicated to realizing a connected Saudi and translating the knowledge-based economy from theory to reality.
China Mobile International (CMI) and Zain Omantel International (ZOI) have also forged a partnership to expedite the adoption and evolution of machine-to-machine (M2M), internet of vehicles (IoV) and IoT technologies throughout the Middle East region.
In the UAE, e& enterprise has also introduced an IoT partner program aimed at bringing new collaborators into its ecosystem for the joint creation of IoT solutions and exploring combined sales opportunities. They have established innovation centers and co-creation labs in Dubai and Abu Dhabi to showcase their capabilities in delivering digital services.
Conclusion
The evolving landscape of the industry, marked by changes in its structure and technological capacities, has paved the way for telcos to seize opportunities that extend beyond traditional connectivity offerings.
Amidst varying levels of maturity in the current B2B business landscape, there exists a robust agreement that the enterprise sector, along with IT solutions and services, holds substantial growth potential for telecom companies across the globe. This growth trajectory aligns seamlessly with the significant investments being channeled into expansive 5G infrastructure deployment. And it’s sure to continue, so long as such commitment remains.
By Elvi Correos, Senior Journalist, Telecom Review
