Global digital transformation is sweeping across public and private organizations, both of which are leveraging emerging technologies such as 5G, cloud, edge computing, AI/ML and automation, among others, to transform their operations. Therefore, telcos must consider a range of factors, ensuring they align with their growth strategies, before signing the dotted lines.
“I believe that service providers are in a unique position to drive the transformation in their own infrastructure, as well as be an enabler and a catalyst for [the] private and public sector,” notes Zayan Sadek, Regional Director, MEA Service Provider, Cisco Systems.
Carefully constructed service level agreements (SLAs) and KPIs in telecom expense management are crucial. While SLAs clearly define responsibilities, metrics, and expectations between customers and vendors, KPIs are the metrics that customers and service providers agree upon to measure the vendors’ deliverables. These agreements ultimately become binding contracts between CSPs and vendors and are continuously impacted by impulsive demand, inflation, interest rate hikes, supply chain disruptions and currency fluctuations. Operators need to manage contract agreements and liaise with various parties like suppliers, customers, property lessors, agencies, and more to generate maximum business value from their technology investments. The importance of a well-rounded contract cannot be overlooked when striving for success in new-market environments brought about by today’s digital and intelligent transformation.
In a dynamic and volatile economic environment, maintaining stable partner policies, fostering healthy and mutually beneficial relationships and ensuring that partners gain real benefits is extremely important. In a recent GlobalData report, deal activity in the Middle East and Africa fell 10.4% in the first eight months of 2024 amid challenging economic conditions. Meanwhile, North America recorded an 18.9% YoY decline, while Europe, the Asia Pacific and South and Central America reported a fall of 16.2%, 8.1% and 27.3%, respectively. Overall, global deal activity fell 15% year-on-year (YoY) to 32,050 deals and the volume of mergers and acquisitions (M&A) fell 9.5% YoY.
However, given the recent lowering of interest rates by the US Federal Reserve after two years, an increase in economic activities is expected as lower interest rates boost cheaper borrowings, potentially encouraging more investment into riskier asset classes, including startups.
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Mutual Value Creation
To form a successful and fruitful partnership, mutual value creation plays an important role. To achieve this, both parties must engage in discussions that clarify the areas of value creation to foster digital resiliency and innovative strategies.
For example, e& and du—the two major network operators in UAE—offer TV and broadband services in the UAE by bundling TV, internet, mobile and landline services in addition to their core network connectivity business. By pushing the boundaries of technology, e& and du aim to empower millions of people with innovative solutions and support the UAE's well-defined vision for digital transformation.
In such pursuits, performance-based, revenue-sharing models can benefit both parties involved. In addition, exploring joint investment opportunities can foster mutual interest in the success of specific projects that can strengthen the bond. For instance, evision—the media and entertainment streaming arm of e& life—solidified its entertainment offerings by signing multi-year deals with major studios including Sony Pictures Television and Amazon MGM, bringing the latest blockbusters, renowned classics, and family favorites from both cinema and television to the STARZPLAY, eLife and Switch TV platforms.
Similarly, du partnered with Arabic streaming platform, Shahid, to broaden access to a diverse array of content for home and mobile customers, resulting in a mutually viable growth environment.
Ooredoo, a leading telecom operator in Qatar, partnered with beIN Media Group to offer exclusive sports and entertainment content to its customers.
Zain, a telecom company operating in several Middle Eastern and African markets, teamed up with streaming platform iflix to offer customers access to a vast library of TV shows, movies, and original content.
Omantel partnered with OSN, a regional entertainment network, to provide customers with access to OSN's extensive lineup of international and Arabic content via Omantel’s platforms.
Moreover, Juniper Research predicts that revenue generated by operators from roaming IoT devices will double over the years to reach USD 2.2 billion in 2029.
Operators in both host and foreign countries can become mutual beneficiaries of international mobile roaming services by partnering with specialized solution providers to enable use cases requiring enhanced connectivity to deliver “mission-critical” services.
Willingness to Continually Reassess
By regularly reviewing KPIs, financial performance, and SLAs, partners can keep the relationship on track. Agreeing on operational flexibility to allow for scaling up or down as market conditions change must be underscored. Commenting on the importance of operational flexibility in 2022, Red Hat’s Sales Director for Telco and Service Providers, Ayhem Alzaaim, said, “One of the key messages this year is around flexibility.”
He further explained that “Over the coming two to three years, much of the telco industry growth areas will be coming through partnerships with enterprises and other sectors. Telcos and service providers must ready themselves through their digital transformation programs to ensure that they have the capability and the technology to support their business and address that requirement.” Fast-forward to 2024, and Alzaaim’s analysis remains spot on and just as relevant.
Companies’ willingness to make changes in their respective modus operandi must be based on the principle of shared benefits.
Telecom companies are under constant pressure and scrutiny when it comes to managing the data privacy of customers, especially considering the increase in cybersecurity breaches. Partner companies must be flexible in complying with the evolving and volatile data privacy policies of different governments in tandem with the overarching General Data Privacy Regulation (GDPR) Regulation, which governs the existing global standard.
For instance, Google agreed to dispose of users' browsing data as part of a resolution to a consumer privacy lawsuit, showcasing its commitment to addressing concerns over data misuse and enhancing consumer trust.
In Kuwait, the Communications and Information Technology Regulatory Authority (CITRA) has drafted the country’s first comprehensive data privacy protection regulation, while Saudi Arabia has also made significant strides with the implementation of a comprehensive personal data protection system, following the issuance of Royal Decree No. (M/19) and subsequent amendments to Royal Decree (M/148). Additionally, the Dubai International Financial Centre (DIFC) enacted the MEASA region’s first AI personal data regulation, further solidifying the commitment to data protection in the digital age.
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Eye on the Future
Telecom companies are not well known for their management of sustainability agendas. The EY Global Climate Risk Disclosure Barometer noted that 43% of telecom and technology companies have not yet disclosed a specific Net Zero, transition or decarbonization strategy.
Telecom companies will need to focus on ESG performance, particularly in areas like implementing green technologies, improving waste management and reduction, helping to bridge the digital divide, and addressing ethical considerations in technology. These efforts will be crucial for attracting long-term investments.
According to an EY Sustainable Valuation study, 53% of telecom executives identified the existence of multiple, competing climate change initiatives, rather than a unified strategy, as the biggest obstacle to achieving sustainability goals. Telecom companies must do their best to associate with partners who will support their sustainability goals holistically.
In support of this, Bocar Ba, CEO and Board Member, SAMENA Council, emphasized the correlation between integration, sustainability, and industry evolution. He advocates for a holistic focus on technology, infrastructure, cyber resilience, and digital innovation to unite stakeholders.
Additionally, emerging technologies are rapidly gaining traction and disrupting existing market trends, as well as developing multi-operator connectivity platforms for the IoT market, AI-driven automation of 5G deployments, and blockchain-based 5G networks. Telecom services providers need to carefully align their R&D strategies with equipment makers, software companies, and cloud providers to come up with differentiated service offerings through resilient agreements.
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Leadership at the Helm
Disputes between two parties arise due to sheer miscommunication and create friction in long-term partnerships. Ensuring alignment in strategic objectives and company culture warrants strong communication channels to resolve issues proactively and maintain a cooperative relationship.
A good communicator who can set clear and realistic expectations and deliverables, including contracts, schedules, budget, and resource details amongst stakeholders is crucial. The company must implement a clear chain of command for reporting and authorization to ensure accuracy and accountability.
A striking example of this practice can be seen in Zain Kuwait’s recent appointment of Nawaf Al-Gharabally as its new CEO, where his leadership strategy will focus on building upon the company's strong foundations.
In addition, a firm grasp of the dynamics of emerging technologies and the supply chain ecosystem will provide an advantage in drafting practical outcomes and expectations for the parties involved.
Studies show that enterprises are more open to buying from telcos with ecosystem awareness and capabilities. Ambiguous communication relating to return on investment (ROI), traditional growth methods, and cybersecurity concerns will become the greatest drawbacks for telcos if left unaddressed.
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In Conclusion
For all the opportunities that come with digital transformation, enormous challenges arise side by side, including competitive, regulatory, financial, environmental, as well as technological challenges. Collaboration with the right partners is key to overcoming all these obstacles, however, above all, a trusted and transparent understanding based on mutual equitability will go a long way in harnessing the promising technological future.
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