For some time, the telecom industry has been dominated by operators who have managed to establish themselves as the key players in the industry: Airtel, Vodafone and Idea (in that order). One would imagine that after fighting the battle for more than 15 years and establishing themselves with combined revenues of over INR 1,60,000, these players can now run the business as usual and reap the benefits of a matured industry. But, consolidation and a very large new entrant are set to change the dynamics of the competition. The first phase of consolidation is resulting in a merger between Aircel (owned by Maxis) and Reliance Communications (which has already acquired MTS operations). This is expected to place them at a comfortable and strong fourth position after Idea (in terms of revenue). On theother hand, Reliance Jio has already extended its services from (only) employees to consumers in the market with a 4G-enabled handset and that too fo free till the end of the year. So, the impending onslaught from Jio is already in play.
Reliance spawns d�j� vu
Now isn’t that déjà vu? In the beginning of the 21st century, Reliance Infocomm launched its services through a bundled offering on a device with substantially low calling rates. Its competitors had no choice but to match these rates, leading to an inflection point. This led to India becoming the fastest-growing telecom market in the world.
This time, we have the same name, Reliance (but in a different avatar), rocking the boat with its 4G services. Although the long impending launch has given other operators the time to be prepared, their bottom line and market share will come under pressure as lot of the subscribers for Jio will come from the incumbent players. On the other hand, the intense competition will increase options for customers, reduce costs and most likely (read hopefully) improve the quality of networks and services in the long run. And like before, it will also benefit the surviving players because the industry will have grown in general.
Long-term evolution technology transforming the industry
Long Term Evolution (LTE) technology is at the forefront of this industrial transformation and has not only impacted the overall industry, but also how companies structure themselves internally to go-tomarket with their data proposition. Also, the kind of people required now is very different from what was needed earlier. In the short run, the biggest impact on talent will be in the following verticals of a telecom organisation:
• Network leaders who understand 4G as a technology and the challenges of planning and launching a service with sub-optimal spectrum levels: The network needs to be scalable at every point of evolution for the next 3 years and thereafter as well. Network leaders also need to be adept at stakeholder management, as they have to deal with the Board in terms of budgets and expansion. At the same time, they must act as a catalyst to bring about a change in the organisation during implementation.
• IT leaders who appreciate that the convergence of network and IT is inevitable: The importance of this phenomenon is emphasised by the convergence of various sectors like m-commerce, m-banking, m-health, m-education and so on.
As companies are adopting the concepts of cloud storage and Big Data, the impact of these technologies will be transformational in the coming days.
• Gone are the days when telecom operators grew through subscriber acquisition. With the proliferation of smart phones and the availability of LTE, the ability of organisations to drive consumption has become extremely important. With the dynamic requirement for product management, consumer insights and communication, marketing function has never been so significant for telecom organisations.
• Product Development: Leaders who can anticipate what sort of content will increasingly be consumed on mobile phones will be highly valued. This could be in the form of videos, music, games, utility services etc. but the ease at which they are available and the application platform that allows consumers to use them seamlessly will be critical.
• Analytics: Leaders who can develop systems and processes that will enable churn management and the uptake of consumption will be in demand. Ability to build the ecosystem around the need and adoption of services will be highly appreciated.
Consolidation will also have its impact on the kind of leaders that a firm will need. Leaders who have the ability to be catalysts of change, build consensus and take people along with them will be highly valued in an environment of mergers and acquisitions.
Today, it is anybody’s guess as to who will survive the most important phase of transformation of the telecom industry but organizations that will have better leaders in the above functions will have an advantage over others. Interesting years coming ahead!