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Telco 2.0 Transformation Index: SingTel, Telefonica lead AT&T, VZ and Ooredoo (but all need more)

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SingTel and Telefonica: Great Telco 2.0 vision and leading the charge, but still behind where they need to be

The Telco 2.0 Transformation Index, launched today, gives an overall comparative benchmark and in-depth analysis of the progress of five leading telcos (AT&T, Verizon, Telefonica, SingTel and Ooredoo) in terms of transforming their operations and building new ‘Telco 2.0’ business models. Overall, it shows that SingTel and Telefonica have made more progress than AT&T, Verizon and Ooredoo, but that all are still at a relatively early stage of maturity and have much still to do.

In the disruptive context of a $400bn ‘digital hunger gap’, and core revenues shrinking by 20-30%, the Telco 2.0 Transformation Index provides the first definitive benchmark of how well telecoms operators are equipped to survive, compete and thrive.

Figure 1 below, taken from the overall benchmarking report, shows the headline output from the Telco 2.0 Transformation Index:

Figure 1: Telco 2.0 Transformation Index Summary Scores
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The score is based on both the telcos’ capabilities and the challenges they face, and a score of 75 (the red dotted line in the chart) would show that a telco has started to deliver significant value through new business models. SingTel and Telefonica, at 60 and 57 respectively, have therefore made a good start relative to their peers but must continue to push forward with their new business models. Verizon (47), Ooredoo (44) and AT&T (39) perform less well overall but nonetheless do well in certain dimensions.

To see how this is captured by the Telco 2.0 Transformation Index, its methodology must first be understood.

The Telco 2.0 Transformation Index is an integrated and comprehensive evaluation system for CSPs covering internal and external parameters

The Telco 2.0 Transformation Index analyses five core domains covering both a CSP’s external environment and its internal structures and performance:

  1. Marketplace: the context in which the CSP operates. It consists of the regulatory environment and the alternate service offerings offered by competitors.

  2. Service Offering: what the CSP delivers to customers in particular market segments. It is defined by the CSP’s corporate and services strategy.

  3. Value Network: the way the CSP organises itself to deliver service offerings. It includes both the internal structure and processes and external partnerships.

  4. Technology: the technical architecture and functionality that a CSP uses to deliver service offerings

  5. Finance: describes the way the CSP generates a return from its investments and service offerings. It also measures the CSP’s success in generating returns.

The overall Telco 2.0 Transformation score for each CSP is based on scorings for these five domains, which are in turn built up from ‘Level 1’ and ‘Level 2’ scores. A maximum of 34 independent parameters are analysed and scored for each CSP.

This framework is summarised graphically by Figure 2 below:

Figure 2: The Telco 2.0 Transformation Index builds up from underlying data and analysis
T2TI Analytical Framework
Armed with this knowledge it is now possible to gain an initial understanding of the CSPs’ relative strengths and weaknesses. Figure 3 provides the details:
Figure 3: Breakdown of the Telco 2.0 Transformation Index Summary Scores
T2TI Summary Score Breakdown
Two key results are as follows:
  1. The Value Network is the key differentiator between CSPs: Telefonica and SingTel, having both made bold organisational changes, score highly here. However, this has not yet been reflected in the quality of their service offerings.
  2. Verizon, AT&T and Ooredoo are strong in very different domains: Verizon performs well in the Service Offering and Value Network, AT&T performs well in the Service Offering, whilst Ooredoo is strong in both the Marketplace and Technology domains.
These, however, are only the results: they can tell us the ‘what’ but not the ‘why’.

The Telco 2.0 Transformation Index also allows the reader to drill down and look at the rationale behind each score in increasing levels of detail. Headline output and analysis, contained within a 230+ slide benchmarking report is reinforced by five 140+ slide ‘deep-dive’ reports for each CSP which are each in turn accompanied by a data pack detailing every numerical input to the CSP’s score.

It therefore provides a unique opportunity for strategists within CSPs and the vendors and investors they deal with to gain both strategic, contextual knowledge of the industry and dedicated, idiosyncratic knowledge of individual CSPs.

“If you do not change direction, you may end up where you are heading.” - Lao Tzu

Traditional (‘core’) revenues continue to shrink and markets are becoming increasingly saturated with OTT competition. However, by changing direction and moving into ‘Telco 2.0’ services (e.g. cloud, digital commerce) top-line revenue growth can be assured in the long-term.

With the telecommunications landscape changing at an unprecedented rate, telcos, vendors and investors have never been under so much pressure to understand both how telcos can adapt and thrive in this new environment and how well they are doing. There are invaluable lessons to be learned from the experiences and aspirations of leading CSPs to date. These are what the Telco 2.0 Transformation Index provides: click here to find out more.

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