How can telcos achieve cost transformation? | NTT DATA

Wed, 01 March 2023

How can telcos achieve cost transformation?

What telcos can do to navigate cost pressures and economic headwinds through network modernisation

Many telco networks are currently facing significant challenges such as:

  • Abrupt changes in macroeconomic conditions
  • Heightened demand for better, faster, and more data-intensive services
  • Energy price rises and supply chain issues

At the same time, however, the inflationary squeeze and tough economic environment mean that many consumers aren’t willing or able to face bill increases. As a result, many telcos are receiving substantial reputational flak for having to raise bills to cover their costs.

This puts significant pressure on telco networks to constantly look for opportunities to cut network costs. The need for constant investments in network capacity upgrades to respond to customer challenges is an area that often generates unsustainable legacy costs. And that’s not before considering the challenge posed by rising energy prices, as well as other ancillary areas, in pushing up the cost for telcos to operate their networks.

For European telcos that have already long-been dubbed as ‘underdogs’ relative to their peers in other markets, this cost pressure is significant. Many telco operators now find themselves especially pressed to discover ways to cover their heightened operating costs without passing them on to consumers.

Opportunities for cost transformation

From our networks and business expertise our team have identified short-, medium-, and long-term cost transformation opportunities.

This NTT DATA Cost Transformation framework provides a broad set of levers useful to identify savings opportunities, and where cost transformation could take place.

We find that many telcos approach these areas in isolation and often through a technology led approach. By contrast, NTT DATA’s integrated approach is for Network Cost Transformation to have a specific focus on realising cost benefits with a focus on adoption. It is only getting people to use new technologies that you realise the savings and benefits. This can be hard given the speed of change and why it cannot be approached in the traditional technology siloes.

Start by leveraging 5G and fibre to remove legacy

While many have seen the 5G and fibre rollouts of recent years as a driver of costs, this picture is rapidly changing. With much of the up-front investment around these major infrastructure upgrades having been committed or realised, many telcos now have a big opportunity to save costs by reducing their stocks of legacy and archaic infrastructure.

One big area for saving by telcos is by finally moving to close their 2G and 3G infrastructure. These old networks have served the public faithfully for years, but the unfortunate fact about these standards is that their usage of resources is far less efficient than 4G or 5G networks. Old networks are generally far less energy efficient on a like for like basis and are expensive to maintain owing to the scarcity of components and talent currently in the market.

Telcos can also save a great deal by removing their legacy copper networking capability. They can do this by scrapping infrastructure around copper-based lines and wires where fibre is installed, and through removing legacy IT systems that are supporting this. This can also free up duct space for fibre which also has a much lower fault rate than copper, meaning this change will deliver lower ongoing opex costs.

Any major network decision needs careful planning to ensure that the changes are financially sustainable as they always involve trade-offs.

Maintaining customer satisfaction

Telcos must walk a tightrope, however, in maintaining customer satisfaction while abandoning redundant or legacy systems. Many customers who still rely on legacy systems have complex needs and often have built many business processes around these technologies. And telcos often have their share internally of legacy systems that they’ve come to rely on.

To ensure that telcos cost transformation initiatives don’t hinder their customers or undermine service quality, they need to ensure they’re acting with expertise in planning and executing major changes in their networking architecture.

Whether it be designing workarounds, virtualisations, or outright replacements, the NTT DATA team have global experience in helping telco brands embark on their cost transformation and modernisation strategies.

Choose the right partner

While many of today’s challenges are common to all businesses, NTT DATA understands that every organisation is different. We work in close partnership with clients to design a digital approach that aligns with your unique business goals.

Your business could accelerate out of the recession ahead of the competition and NTT DATA can help. As a first step, we’d like to set up a workshop to identify the best ways to support your objectives. If you’re interested, get in touch to find out more.

Stay tuned for our next blog on Cost Transformation.

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