In 2020, it was estimated that 70% of internally-led digital transformations fail. Two leading factors behind these failures was not having a clear vision for these digital transformations and treating the organisation’s digital transformation as an isolated job for the tech teams to sort out.

On the other hand, there is strong pressure in our telco industry to reinvent ourselves, hence the now popular phrase “Telco to Techco”. But what’s been pushing us in this direction and what does a techco mean in the first place?

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The Problems and Drivers Pushing Telcos to Become Techcos:

Increasing Costs, Flattening Connectivity Revenue

Our industry has been investing a lot in 5G lately. However, the capital expenditure cost of upgrading to 5G infrastructure has only been going up on top of maintaining existing technological infrastructure. 

Core revenue has been decreasing as connectivity prices decrease. Historically, our industry’s revenue compound annual growth rate has been sluggish at just under 1 per cent. 

In addition to finding new ways to properly monetize 5G, telcos are under pressure to find sources of non-connectivity revenue too.

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Shareholder Value Destruction

Telcos have historically been valued lower than the techcos their services have enabled like Meta, Amazon, Alphabet, Microsoft and Apple (MAAMA). Tech companies in 2023 had 5 to 15x market capitalisation to revenue multiples versus telcos at 0.5x to 1.5x. 

In addition to low shareholder value, telco revenues have also been struggling. In the past, voice and SMS were core components of telco revenue. However, these sources have faced structural value destruction and revenue decline as Over-the-Top (OTT) services like data connectivity have been cannibalising them.

There’s a lot that our industry is currently learning and applying from the tech industry to boost shareholder confidence in telcos and boost shareholder value again.

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Low Customer Experience and Customer Engagement During the Age of Discerning Digital Natives

The telcos were infamous for poor customer experience along with customers having little to no telco plan flexibility. As a result, the average telco NPS sits at -1 while the average techco NPS sits at +60. Nowadays, there’s money to be made by being more customer-centric.

Digital natives, like Gen Z and Millennials, are more discerning in the customer experiences they look for, but also live more of their lives through their mobile phones giving them high revenue potential. These same digital natives stated that high-quality customer experiences are a strong factor in their ‘premium telco’ considerations and they’ll also make up 75% of the workforce by 2025.

Telcos are now under pressure to be more customer-centric and to give more power back to the consumer to survive.

What’s Expected of a Techco?

Telcos to Techcos

This phrase means different things to different people. Like the phrase ‘digital transformation,’ an organisation’s value depends on its own definition of it.

One broad definition of a techco is a company that uses technology to make their companies more capable of growing and adapting to changes in their environments in an agile way. 

Others have more detailed definitions, such as using technology to drive improvements in a few areas like:

• Client-centricity
• Digital experience
• Automation
• Data utilization

So with that said, here’s what we think “Telco to Techco” means:

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What The Ideal “Telco to Techco” (T3) Looks Like

Our vision of the ideal telco-to-techco (T3) is a company that uses technology to reinvent itself from the ground up and become:

To be the most admired digital brand in the market

Now let’s back that slogan up with the value that it should bring:

• Customers: We will track the quality of their experience using Net Promoter Scores (NPS).‍‍
• ‍Company - Industry-leading EBITDA and best-in-class cost structure tracked by profit growth.‍
• Shareholders - Tracked by Enterprise-Value-to-Revenue Multiplier (EV/Revenue).

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And have these characteristics:

Customer-centric - providing award-winning customer experiences proven by high NPS scores.

Flexible and Innovative - utilising AI and data analytics to improve customer offers and experiences.

An Ecosystem Player - leveraging strengths and partnerships to diversify beyond core connectivity revenue, boosting the average revenue per user.

The ideal T3 must be the first choice for connectivity and beyond for both digital pioneers and mainstream customers. It can achieve this by delivering flexible and transparent digital experiences while engaging them in value-added digital lifestyle services.

If we as an industry are going to help bring out the full potential of 5G and telco services, we need to branch out beyond selling connectivity. The ideal T3 not only gets its foundations right but also has room for agile business innovation and experimentation to stay ahead of the competition. 

We’re not keeping our vision of our ideal techco to ourselves, this is something we want to share with your telco brands. What we’re sharing is based on our perspective as a telco brand owner and our learning from our telco partnerships through the software and services we provide. Crafting the ideal techco is an ongoing process we want to build together with you as an industry.

The ideal T3’s product will have three main pillars: Connecting, Delighting and Going Beyond.

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Connect

Before we can discuss non-core revenue, the ideal telco needs to perfect its core connectivity offering. To capture savvy digital natives, we believe the ideal telco will give power back to consumers.

This power comes in value-for-money plans, including limitless data plans and a great digital experience. 

Our ideal T3 will have a process for setting up an account from order to first connection that is frictionless, fast, and easy enough for consumers to do themselves. 

The digital app will take cues from today’s juggernauts like Amazon, where the purchasing experience will be optimised through measures like integrated A/B testing, best-in-class online retargeting of prospects and more.

We believe that the ideal T3 should offer frictionless, personalised, and delightful customer service. AI-powered customer service experiences will have 24/7 digital customer support with self-service options and zero waiting time for customer service that needs a human touch.

Delight

Our industry is still in the midst of realising 5G’s full potential. Meanwhile, advancements in technology and connectivity are leading to new ways for smartphones to add value in every aspect of people’s lives. 

The ‘Delight’ pillar of an ideal techco can anticipate and meet the digital lifestyle needs of digital natives. By becoming a pivotal player in their lifestyles, the ideal T3 can differentiate itself through all these lifestyle integrations and a superior customer experience.

“We’ve got an app for that”

China has WeChat, while Indonesia has Gojek. Both super apps are household names and lifestyle hubs that telcos can learn a lot from.

There are more and more startups and services that are springing up and being able to anticipate where these apps will come in, and then secure partnerships with them is one of the ways that the ideal techco can become an integral part of people’s lives. 

Partnerships with lifestyle service providers like Udemy, FoodPanda and even gyms can shake things up. 

Telcos already provide roaming services, but why not also consider being a travel partner with itineraries, unique accommodations, airport transport and global insurance plans?

Another option is to boost their experience beyond just ordinary discounts and vouchers. Why not be ambitious and provide exclusive, luxurious experiences? Why not 1 + 1 dining offers or private art tours? Why not have personalised shopping experiences too?

All of this data can be optimised into loyalty plans to continue giving customers the best experiences so that they’ll choose your brand over anyone else. All of this will be data-driven with 360-degree operations to optimise the experience, products, and bundles to reduce churn.

Beyond

The Connect and Delight pillars focus on what’s possible today, and beyond focuses on taking it to the next level. 

Part of becoming a T3 is optimising what we already have and giving ourselves the ability to adapt and create new capabilities. Central to the beyond strategy is the partnerships we can enable through infrastructure like OpenAPIs and the capability to rapidly test and launch new products in a safe and undisruptive way. 

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Becoming an Ecosystem Player

We’ve touched on how telcos can become central ecosystem players, opening up possibilities for new B2B2C and B2B2B partnerships. With how AI is changing the game along with ever-new lifestyle-integrating apps showing up, being able to fluidly partner with all these new service partners and launch them in our own telco ecosystem is one of our current aims both for our own telco and our partners.

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Innovating to Stay Ahead

Innovation is both a mindset and a process. The ideal telco can collaborate with partners to develop improvements to the experience and product offerings. These will currently include B2B2C offerings, but can eventually include innovative B2B2B offerings like providing cloud power to AI-firms.

At Circles, we’re currently involving our partners in our innovation engine to make constant improvements to our customer offerings and digital experience, like this example with KDDI’s Povo.

To ensure we give our customers the best experience possible, another initiative we’re working on is hyper-personalisation. 

By analysing the depth of user data that we have through app and site user activity, we not only produce personalised marketing journeys but can create product bundles that they’ll love.

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Taking Mobile Travel Experiences Further Beyond

As an example of one of the products of this innovation, we’re also on the way to shaking up the way that mobile travel experiences work beyond just mobile roaming. 

We recently launched Jetpac to shake up the way you experience international travel connectivity. Aimed at hyper convenience, it bundles roaming on an eSIM so that you won’t need to juggle multiple SIM cards or reinstall eSIMs whenever you land. 

Giving power back to the consumer means being transparent and giving them flexibility. Since Jetpac is an eSIM active everywhere with data usage tracked live, so you won’t get unexpected bill shocks. There are also zero lock-ins when you activate Jetpac.

Beyond the mobile plan experience, signing up for Jetpac also gives you access to 1,100 lounges worldwide.

This is just one example of many more on the way in terms of how telcos can reinvent themselves and go beyond connectivity.

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While your organisation’s definition of a techco could vastly differ from ours, we’re pushing ahead with our vision of what the ideal telco-turned techco could look like. As we mentioned, we don’t intend to keep this vision to ourselves, and you can partner with us so you can shape and achieve this vision too.

Contact us today to find out more about our digital transformation capabilities, partnership arrangements and how we can help your telco today!

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