Achieving a successful telco to techco transformation is a complex and multifaceted process that requires a holistic and strategic approach. It involves not only technological upgrades but also significant changes in culture, operations, and customer engagement strategies.
Delivering digital, personalized experiences on-demand is now a top priority for telcos turned techcos. CSPs must surpass the standards set by digital natives and manage vast amounts of data across business, technology, processes, and product performance.
Case Studies and Universal Blueprints
S&P Global Ratings predicts double-digit growth for tech companies as they explore new avenues for expansion and diversification. This trend highlights the evolution of UAE telecom operators into prominent tech sector players.
S&P noted that e&’s goal—to generate 40% of its revenues through tech-related businesses by 2030—is attainable through a blend of organic growth and external expansion.
As a pioneer of the telco-to-techco phenomenon, e&’s transformation into a global technology group represents the entity’s ambition, innovation and commitment to growth. When asked about what inspired e&’s transition from a telco to a techco, Group CEO, Hatem Dowidar said, “I think the key reason for our transformation and transition is a search for customer intimacy and shareholder returns.”
As part of e&’s transformation, the company has established five distinct business verticals: etisalat by e&, e& international, e& enterprise, e& life, and e& capital. This strategic approach allows them to manage each vertical effectively, enhance agility, and maximize value creation.
etisalat by e& CEO, Masood M. Sharif Mahmood, told Telecom Review that this enables e& to “attract strategic partners and investors who align with the specific objectives of each vertical, resulting in a more significant impact.” The company has adopted a growth mindset and developed a future-ready business model to fulfill promises, add value for shareholders, seize opportunities and accelerate growth.
On the other hand, du’s historic financial performance in 2023 has demonstrated its unwavering commitment to digital transformation and accelerated growth. In line with its commitment to customer experience, network expansion, and continuous innovation, “du is dedicated to meeting the evolving market demands and needs of our [its] valued customers,” stated CEO, Fahad Al Hassawi.
As a result, the company has not only maintained its AAA- rating but has also risen to become the third-strongest brand in the UAE and seventh-strongest in the Middle East. This significant growth has propelled du into the Global Top 25 Telecom brands, driven by du’s proactive approach to integrating cutting-edge technologies and customer-centric services.
Following its successful merger with Hutchison 3 Indonesia, Indosat has become one of the top global telcos, emerging as Indonesia's second-largest mobile network operator. Indosat President and CEO, Vikram Sinha, proudly explained their strategic transition from a telco to a techco.
He stated, “During the merger, Indosat focused on transforming rather than integrating, aiming to empower Indonesia and pivot towards becoming an AI-native techco. By leveraging scale and investing in technology and human capital, Indosat aims to deliver a superior customer experience and build trust in its brand.”
As part of its telco-to-techco transformation, Omantel has formed high-profile international partnerships in the sectors of AI, cloudification, and digital transformation, including collaborations with Huawei and AWS. Their ambitious diversification strategy, leveraging Oman’s unique location, has positioned Omantel as an industry leader and a key wholesale provider to telecom operators, hyperscalers, and content providers locally and globally.
Vodafone Oman COO, Aneth Guerra, also shared the telco’s vision, which encompasses being rooted in “creating a connected tech-telco ecosystem that equips businesses to excel in today’s dynamic digital environment.” Vodafone Oman is also at the forefront of transforming Oman’s business landscape with its digital-native foundation and NEXT-LEVEL solutions which support not only Oman’s economic diversification goals but also enhances technological advancements crucial for sustained growth.
Bassam Al Ibrahim, CEO, Ooredoo Oman previously mentioned to Telecom Review that “ICT will be a main driver for businesses.” Hence, moving from a telco to a techco will be “more disruptive,” as the company transitions from offering basic services to the next level through consistent investments, collaborative partnerships with businesses, and the continuous development of advanced technologies.
Telecom Egypt is now focusing its efforts on transitioning from a telco into a techco, following its transformation into an integrated telecom operator and the first digital operator in Egypt. Sharing Telecom Egypt’s outlook for 2024, CEO, Mohamed Nasr Eldin, stated “we have many opportunities to pursue and will continue executing our strategy, focusing on our core strengths to better serve our customers, and increase shareholders' value.”
As a trusted CSP partner, Netcracker noted that the journey from a telco to a techco will bring about advantages but telcos need to blueprint strategic plans and solutions to seize opportunities similar to those exhibited by tech companies (techcos). These opportunities include the possibility to innovate more easily; simplify, streamline and increase automation; and collaborate at scale much more effectively.
The Netcracker Digital Platform (NDP) provides the right technology foundation to help CSPs take the next step in digital transformation to become techcos and redefine themselves for what’s ahead.
Similarly, TIMWETECH works with telecom operators across the region and the world to offer a digital platform that takes telecom operators to the next level of digitization in their environment as well as their customer experience paradigm.
A Key Modern Component: AI
The biggest challenge in becoming an AI-driven techco is overcoming the conservative "telco trap mindset," which requires extensive validation and incremental improvements, stifling rapid experimentation and deployment.
In response to this, as telcos evolve into techcos, AIOps has become essential for E2E service management. Applying automation and AI to service operations can significantly benefit telecom providers by enhancing assurance, proactively communicating with customers, and improving performance with GenAI.
e& international CEO, Mikhail Gerchuk, pointed out during a Telecom Review Leaders’ Summit fireside chat that as an evolving global techco, e& has implemented the most sophisticated AI tools to analyze data in order to provide the most suitable recommendations at any given time, aiming to optimize customer experience. “As a result of this, we were able to improve our upsell numbers three-fold,” he explained.
In an emerging trend, telcos are developing small language models (SLMs) tailored for various verticals to drive business. Their scale and trusted security gives them a reliability advantage over startups, positioning them as leaders in AI-driven services.
As a techco company, Omantel is harnessing the benefits that AI and other 4IR technologies are offering to different domains as they work to enable the digital transformation in the Sultanate of Oman.
Reailize is dedicated to nurturing its client's digital transformation journey, known as the shift from a telco to a techco. The company’s core competencies include AI/ML-based operational automation which consists of autonomous network monitoring with anomaly detection, root cause determination and streamlined remediation.
According to Dr. Lidia Stępińska-Ustasiak, Public Affairs Advisor, Polish Chamber of Commerce for Electronics and Telecommunications, the most important driving force behind the growth of the telecommunications sector will be the transition from telcos to techcos. “Telecoms will be more focused on responsible and effective applications of AI on innovations, new business models, agility, and new investment models.”
A vital aspect of the telco-to-techco transformation is applying AI to optimize network traffic, manage data patterns, reduce latency, enhance user experience, and save energy.
The Future of Telco-to-Techco Transformations
The combination of market pressures, technological advancements, strategic initiatives, and evolving customer expectations will likely drive more successful telco-to-techco transformations in the future.
As traditional telecom markets become saturated, telcos are motivated to diversify their services and revenue streams. Transitioning to techcos allows them to tap into new markets and offer innovative services like IoT, cloud computing, and AI.
Many telcos are significantly investing in digital transformation initiatives. This includes modernizing their infrastructure, adopting new technologies, and retraining their workforce to support new tech-driven services.
Telcos are also increasingly forming strategic partnerships and acquiring tech companies to enhance their technological capabilities and service offerings. These collaborations can accelerate their transformation into techcos.
More importantly, customers are increasingly expecting integrated digital services and seamless connectivity. Telcos that can meet these expectations by offering innovative tech solutions will likely see greater success.
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