- Paltry telco revenue vs communications sector a clear motivator
- Shift to digital to happen faster than predicted, another imperative
HOW do you inject a sense of urgency into an organisation that had US$15.3 billion (RM63.3 billion) revenue in 2015? That has over 200 million customers across 13 countries, many of them in the developing world who are acquiring an ever greater appetite for its services?
For Telenor group president Sigve Brekke (pic above), it is by trying to create a burning platform mentality as he transforms Telenor from a telco to a digital services provider in a near-future world where customers will be interacting digitally for most of their needs.
Brekke admits he does not know when exactly that will happen, within five years or 10. “I only know that the shift [to digital] will happen much faster than predicted,” he tells DNA (Digital News Asia), in a conversation in Kuala Lumpur after launching Telenor subsidiary Digi Telecommunications Sdn Bhd’s incubator, Incub8, on June 1.
Clearly the looming threat of global Internet companies is also on his mind with the inevitable shift to digital, and he loves sharing one specific fact: That telco industry revenue is growing at a paltry 1% a year versus the 40% to 50% hypergrowth of the communications industry.
To compete, he sees Telenor needing to execute on a number of fronts, with financial services especially important for the telco which has over 100 million customers in developing countries, many of them among the ranks of the unbanked.
“This is why financial services are very important to us, and we want to do this ourselves [instead of partnering]. We may be the only ones that can charge customers, especially those who do not have bank relations,” he says.
This is critical to Telenor because “if we can get into that position, then we will be very relevant to the Facebooks and WhatsApps of the world, as they need to go through us to get to their customers.”
Another major shift that he sees, this one happening within the telco industry itself, as early as within the next 12 months, is the SIM card disappearing from phones.
“I think you will see a major change when the SIM goes away, and this will start with high-end phones.
“What this will mean is that as a customer, you can choose which operator to use – per call!
“That’s how it will work, which means we will lose touch with our customers and the only way we can survive and be relevant to them is to build two new competency models,” he says.
The first is to develop Telenor’s data analytics to a much higher level than it is today. “We must know you as a customer much better so that we can send you relevant services, information, and offers,” says Brekke.
He knows that Telenor itself is not able to deliver this almost predictive level of services and offers to its customers.
The company has to partner, which is why he says it has to be very good at partnerships “so that we can deliver the most relevant content to our customers,” adding that he thinks within five years, local content is going to become even more important.
Failure to execute on its transformation from a telco to a digital services provider means that Telenor, and by extension its subsidiaries such as Digi in Malaysia, will be consigned to being “dumb pipes,” as Brekke puts it bluntly.
This is a nightmare scenario for telcos as they watch value in monetising their millions of customers being captured by startups and brick-and-mortar companies that have made the transition to digital, while they are stuck in a commodity business just delivering connectivity.
Clearly, this reality is not an option for Brekke.
Previous Instalment: Digi launches incubator, Telenor CEO says it’s all part of the plan
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