The substantial investments in 5G and advanced technologies have strained profit margins, prompting global telco leaders to embark on transformative journeys to redefine their business strategies.
Amidst these shifts, calculated decisions are crucial. A recent McKinsey survey highlighted the concerns of 60 telco CEOs and top executives worldwide, emphasizing profitability, competitive pressures from new business models, and regulatory complexities as main challenges.
To navigate these complexities and drive sustainable growth, telcos are focusing on accelerating innovation, elevating customer experiences, and embracing continuous digital evolution.
These companies aim to secure shareholder value by either partnering, building, or buying.
Partnering
To stay ahead, telcos are forming partnerships to enhance their networks, optimize costs, and expand service capabilities. However, alignment is key. Partnerships should be built on shared objectives, technological compatibility, and robust data governance to maintain security and regulatory compliance.
Nowadays, telcos are collaborating with hyperscalers and leveraging their cutting-edge technologies to accelerate time-to-market (TTM). During COMEX 2024, Omantel proudly announced a strategic partnership with two hyperscalers: Amazon Web Services (AWS), to establish a sovereign cloud services center and build an integrated e-commerce platform in the country, and Google Cloud, to set up the first distributed cloud edge service in the META region. center3 also announced a strategic collaboration with Oracle to provide hosting and data services for the planned Oracle Cloud Riyadh Region as well as support the expansion of the existing Oracle Cloud Jeddah Region.
Joint ventures (JVs) also help operators share the financial burden of deploying expensive infrastructure, making large-scale rollouts more feasible, and expanding their reach. Investing around USD 600 million, Telecom Egypt and 4iG Group signed an MoU to establish a joint venture to build a modern fiber network in Egypt that equips an average of six million households with access to a state-of-the-art, high-speed network in the coming decade.
Additionally, Zain and Omantel have launched Zain Omantel International (ZOI), which aims to manage all international wholesale requirements for Zain and Omantel’s operations in eight countries, serving over 55 million customers. In Europe, Vodafone Group, Deutsche Telekom, Orange, and Telefónica are jointly working to implement a privacy-by-design digital marketing technology platform that seeks to benefit consumers, advertisers, and publishers alike.
More importantly, successful digital transformation often hinges on an extensive partnership ecosystem. Telcos must align with solution providers to gain technical expertise. For example, Software-as-a-Service (SaaS)-driven collaborations enable rapid integration through standardized application programming interfaces (APIs) and cloud technologies.
Zain KSA recently concluded a comprehensive digital transformation initiative in collaboration with Netcracker Technology. This ambitious cloud-based business support/operations support system (BSS/OSS) overhaul spanned all business segments and was completed in under three years. The successful implementation has significantly boosted operational efficiencies, resulting in a 50% reduction in both product development time and customer line activation duration.
Infrastructure investment remains a major financial strain for telcos, making network-sharing agreements increasingly attractive. By 2020, nearly 500 such agreements had been announced globally, with savings of 10-25% in operating expenditure (OpEx) and 15-40% in capital expenditure (CapEx), depending on the model used (passive or active network sharing). These collaborative efforts not only reduce costs but also accelerate the deployment of next-generation connectivity.
In the business-to-business (B2B) sector, network APIs represent a promising revenue stream. By developing interoperable APIs for key 5G capabilities—such as speed-on-demand and low-latency connections—telcos can empower enterprises to build new applications while improving their own monetization strategies. In September 2024, telecom players united to combine and sell network APIs on a global scale, spurring innovation in digital services.
Telcos also hold a strategic advantage in connectivity and in-country cloud infrastructure, making them valuable partners for IT and digital service providers. By offering premium technical support, service-level agreements (SLAs), and regulatory-compliant cloud services, they can strengthen relationships and secure long-term collaborations.
As the industry shifts, telecom operators must embrace strategic partnerships to drive innovation, optimize investments, and capture emerging digital opportunities.
Those that successfully align with the right partners will be well-positioned to thrive in an increasingly interconnected ecosystem.
Also Read: Innovating at the Edge: Partnerships and Strategies Transforming ICT in 2025
Building
When expanding their services, telcos must decide whether building is a feasible option. While building in-house grants full control and customization, it demands high upfront investment, specialized talent, and lengthy development timelines. Hence, companies are advised to only build when it aligns with their core competencies, such as when offering solutions no competitor can replicate.
One of the common strategies among telecom companies today is their transformation into technology companies, or techcos. Through this model, telcos expand internally to maximize their strengths. In order to do so effectively, they must balance innovation, efficiency, and strategic investments to deliver next-generation connectivity while maintaining profitability and differentiation. In fact, GCC techcos are anticipated to garner a double-digit increase in revenues as they explore novel avenues for operational expansion and diversify their revenue streams.
Telcos have been diversifying their revenue streams beyond traditional infrastructure investments.
One promising avenue is private 5G networks for small and medium-sized businesses (SMBs) and other industry verticals. In the B2B space, telcos are already providing solutions like managed security services and Network-as-a-Service (NaaS). Many are now tailoring these offerings to specific verticals, creating industry-specific value propositions.
Customer experience (CX) is also a key focus, with many telcos streamlining and automating interactions to achieve simplicity and seamless transactions. KPMG emphasizes that long-term success hinges on strengthening core connectivity to deliver high-speed, reliable networks at scale.
Buying
Telcos often turn to acquisitions rather than developing technology from scratch to stay competitive and accelerate innovation. Buying provides immediate access to new capabilities, enabling telcos to enhance their offerings without long development cycles.
Accurately representing this model in the latter half of 2024, Nokia acquired Rapid’s technology assets. The integration of Rapid’s API technology with Nokia’s Network as Code platform is set to deliver substantial enhancements to operators. Both e& and stc have also expanded to Europe with billion-dollar acquisitions.
Beyond full acquisitions, telcos are also purchasing licensing agreements, allowing them to access proven solutions without incurring the risks associated with in-house development.
However, integrating acquired technology with existing infrastructure can be complex, requiring careful planning to avoid incompatibility issues.
Thus, post-merger integration remains a key challenge. Beyond technological integration, telcos must align acquired companies’ staff, culture, and processes. While acquisitions can be faster than internal development, it's worth noting that complications can arise that could eventually lead to losses.
Nevertheless, the benefits of buying are significant. It allows telcos to stay focused on core competencies while capitalizing on external expertise. Furthermore, this strategy can also strengthen competitive positioning by eliminating potential rivals and expanding access to a broader customer base. Additionally, telcos can achieve cost efficiencies by integrating complementary technologies, leveraging economies of scale, and optimizing operations.
Conclusion
The most successful telcos will be those that strike the right balance when making strategic decisions: building ensures control and differentiation, buying accelerates innovation and market reach, while partnerships optimize costs and drive scalability.
In a fast-evolving industry, agility and foresight will determine which companies lead the next era of connectivity and digital transformation.
Read More:
TRS-24: Telecom Leaders Discuss Collaboration and Innovation in Telecom
Collaboration and Innovation: The Factors Driving ICT Forward in 2025