A new report from Ernst & Young (EY) said telecoms operators across the globe see disruptive competition -- particularly from over-the-top (OTT) players -- as the biggest challenge they face today, with regulatory issues in second place.
The study, titled Global telecommunications study: navigating the road to 2020, was based on interviews with senior executives from 40 companies in Europe, the Middle East, Africa, Asia and North America as well as input from technology providers and industry experts.
The fact that disruptive competition is regarded as the leading industry challenge today comes as little surprise, given the growth and increasing penetration of messaging and chat services such as WhatsApp.
Indeed, the majority of respondents highlighted disruption as a leading challenge, with 36 per cent singling it out as the number one challenge facing the sector.
EY noted that while operators still enjoy a majority of "ecosystem revenues", OTT players have grown their share to 10 per cent in the space of a few years, and competition in retail and distribution is becoming more intense. All respondents recognise the potential of OTT players to reshape "demand scenarios", EY said.
The company further noted that regulatory uncertainty is the number two perceived challenge, with spectrum release frameworks and data privacy legislation seen as particular pain points.
From a strategic perspective, customer experience management dominates the telco agenda, with 68 per cent of senior industry executives citing it as their number one strategic priority. Cost control and network upgrades also rank highly as strategic priorities, and the majority of respondents see their organisation's capex rising in 2015, "contradicting industry forecasts of falling capex in years to come," EY said.
Given the huge focus on mergers and acquisition in recent weeks and months, it is interesting to see that inorganic growth ranks lower down the list of operator priorities, which EY said perhaps reflects the already high levels of sector M&A.
Nevertheless, in-market consolidation is seen as the most important type of M&A, with more than half of the participants saying an entry into a new industry vertical is an important basis for deals.
EY said operators would need to engage in a difficult balancing act to meet a range of different customer demands, adding that increased agility would play a vital role in future.
- read the full EY report here
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