SINGAPORE (Apr 16): The impact of Covid-19 has rocked economies across the world, resulting in breathtaking stock market volatilities and creating remarkable challenges for societies. Amid this global uncertainty, one constant has been our need to remain connected. Telecoms companies are positioned to ensure that need is met. But it is important they adopt the right strategy to ensure their own continuity in the period to follow.
Growth in remote working, increased data usage, and demands for home office products have shown telecoms’ key role in the global response. While this positions it among a lucky few growth industries, it is not without its challenges.
While telecoms companies are working to meet evolving short-term needs, it is vital they initiate their future responses. We suggest a holistic response that tackles the immediate threats, prepares robustly for the near-term rebound, and embeds structural enhancements to improve resilience in the medium term.
Demand
While demand for physical handsets has plummeted, data and virtual products have experienced remarkable growth. Average usage of mobile internet in China alone grew almost 20% to 7.3 hours daily. Preparing for the rebound will require close monitoring of channels and scenario assessments to identify when inflection points emerge, while developing “rebound” offers and marketing campaigns to deploy. Examples of this strategy could include smart pushes of upgrade offers when contract limits approach, retail simulation through virtual stores, and “comeback celebration” campaigns.
Medium-term responses should be geared towards sustainable structural enhancements. Covid-19 will inevitably transform the way businesses and individuals operate, and telecoms companies must adapt. This should include focus on data-centric offerings such as remote working, video conferencing, e-learning, as well as VR and AR products. The short-term demand for these services is likely to continue now that Covid-19 has forced widespread familiarisation.
Additional services such as telemedicine, self-diagnosis, and enhanced cybersecurity features should also be explored. Telecoms firm Orange Polska offers one example, having released premium features of its CyberWatch product to business customers in Poland.
Supply and installation
Every link in the chain for digital technologies, from raw materials to manufacturing, is facing constraints. Meanwhile, limitations on physical access to sites is creating barriers for technology rollout. While navigating these short-term challenges, telecoms companies must keep an eye on the longer-term imperatives.
They should ensure a robust catch-up plan for manufacturing based on potential inflection points in demand, while ensuring transparency on the backlog of orders and halted operations, and re-evaluate stocking paradigms, creating deeper buffer stock of critical items.
In the medium term, boosting online sales and direct-to-consumer capabilities through building out digital channels will be vital. This should be implemented alongside plans to promote supply chain resilience through enhanced diversification and contingency planning.
5G offers a fascinating focus area. The rollout of this transformative technology has been itself transformed by the emergence of Covid-19, hampered by labour shortages and extended work schedules. Telecoms companies should assess their current 5G investment strategies, and seek to adapt to rollout functionality ahead of competitors to gain a technology advantage. Telstra and Verizon, for example, have both committed US$500 million ($712 million) of investment to accelerate 5G infrastructure rollout despite current challenges.
Operations
Operations management is extremely challenging at this time of widespread uncertainty. A surge in maintenance and repair jobs for critical communication networks, alongside huge upswings in call centre requests, must be balanced against on-site risks for staff. This physical access challenge for engineers is compounded by limited parts availability.
In these challenging times, the business-critical nature of your network operations centre (NOC) should be recognised and protected. Telecoms companies should improve crisis-proofing of NOCs through remote and cross-site access. On an enterprise level, cross-skill operations should be adopted to enhance flexibility, such as adaptive T-shaped roles, and flexibility in retail and call centre roles.
Telecoms companies can use this crisis as a catalyst to accelerate data-driven digital capabilities such as automation and AI-centric digital solutions. Trailblazers in automation, such as Elisa, offer a template of how pioneering solutions can unlock opportunity. They should boost digital and remote service channels, including jumpstarting social or online-to-offline strategic collaborations and new operating models.
Business foundations
Building stronger foundations is vital for the telecoms industry moving forward. This will require equal focus on people, culture, and financial security. It is important in these turbulent times to ensure you safeguard company-wide culture and connections. A shared culture and open collaboration will be powerful tools at a time of transition.
Increase workforce flexibility through efficient remote working infrastructure, and flexible hiring processes. Adapting your financial planning to include scenario planning and improved liquidity management will also boost near-term resilience. It is equally important to strengthen your external reputation as a pillar of society. Cisco, Microsoft, and Google unlocking premium collaboration features for customers to effectively enable remote working offers a prime example.
In the medium term, the telecoms industry must embrace key learnings from the Covid-19 crisis. A focus on improved crisis management must be embedded in your business. Develop a playbook of lessons learned and accelerate new ways of working and digital collaboration through enhanced ecosystems. The seismic impact of Covid-19 may also unlock new market opportunities through potential acquisitions of hard-hit but solid assets.
On an internal level, securing liquidity to weather the storm is vital, as cash is king. Secure your financing, generate transparency, game potential liquidity scenarios, and introduce groupwide cash office strategies where appropriate.
Covid-19 has delivered an unpredictable and widespread shock which is challenging economies and organisations across the world. Yet from any period of disruption comes an opportunity to transform. This is a time for telecoms companies to capture opportunities amid adversity, and build long-term advantageous positions founded on effective near-term practices and enhanced medium-term structural resilience.
Prasanna Santhanam is a Managing Director & Partner at Boston Consulting Group, Singapore
