Analysis of Digital Transformation In the Telecommunications Market

Focus on the LATAM Market


The advancement of direct and indirect competition in the Telecommunications market impacted revenue growth rates and profitability margin of traditional operators worldwide. In 2015 compared to 2014, 7 of 9 major European telcos, many of which have presence in Latin America, had flat or declining revenue.

While telecommunications services penetration in corporations is high, Information Technology (IT) and Value-Added Services (VAS) penetration is in the growth stage. This situation leads operators to rethink their organizational structure and portfolio to consumers, in line with the process taking place in the United States with Verizon and AT&T.The main elements of the digital transformation currently been worked by telcos are:

  • Self-service: Examples of cases of Oi and Telefonica Vivo in this study indicate alternative 100% digital channels to service. In Brazil, Oi, Vivo and TIM have launched applications to begin the journey, but still need to improve the experience.
  • Agile IT: in order to achieve the digital transformation, operator´s physical, virtual and logical resources need to be managed. Traditional network and Network Function Virtualization (NFV) need orchestration regarding Business Support Systems (BSS) and Operational Support Systems (OSS). Moreover, telco´s physical and virtual multivendor elements need interoperability. Vimpelcom stands out in the market with the investment of US$ 1 billion to redesign its portfolio. Latin America operators are still starting the journey, but structure simplification and NFV/Software-Defined Networking (SDN) are on the agenda of the largest operators.
  • Verticals solutions: CSPs are also seeking opportunities to provide new services and business solutions for verticals. The challenge is to diversify a telecommunications service provider for several other services, where Vodafone and AT&T are featured globally. In Latin America who stands out most is Telefonica.

(Source: Frost & Sullivan)

Telecom Industry

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