Khaled Biyari, Group CEO, Saudi Telecom Company (STC): Interview

Interview: Khaled Biyari

With fixed-line telecoms declining and mobile penetration at the saturation point, what are telecoms firms doing to develop new revenue streams?

KHALED BIYARI: Globally, telecoms operators’ revenues are stagnating, while the over-the-top providers (OTTPs), video, audio and other services that piggyback free on telecoms systems are gaining in number and popularity, making the traditional operators’ task much more difficult. As a result, telecoms providers have begun to pursue growth through innovative digital ecosystems designed around joint ventures, acquisitions, or internal research and development.

I believe that for telecoms operators, success will depend upon gaining a deeper understanding of coherent digital ecosystems, developing or acquiring the capabilities needed to implement digital ecosystems, and making sure the ecosystem is greater than the sum of its parts. In most cases, this means entering into the right partnerships, developing the application programme interfaces that are needed to create apps, and offering business customers big data analysis, mobile payment programmes and mobile advertising solutions. Without these capabilities, telcos are unlikely to thrive in this highly competitive arena.

Telcos should actively explore alternative business models in adjacent areas, such as digital services and mediation with digital service providers (a two-sided business model), which will serve to defend existing business through increasing retention and acquisition of existing core business while generating additional revenue streams and developing digital capabilities to position themselves for the transformation of the industry. However, telecoms firms should be mindful of the importance of time to market, which can only be achieved through swiftly bridging capability gaps and growing their revenues inorganically via partnerships with and acquisitions of digital services providers. It is also important that telcos be able to manage the regulatory framework in a way that ensures a level-playing fields for all service providers, including OTTPs.

How can telecoms operators mitigate the negative impact OTTPs are having on the average revenue per user (ARPU)?

BIYARI: Operators can adopt and endorse the new business opportunities OTTPs are offering such as hosting, providing services to OTTPs, jointly offering services, operator billing for app stores, advertisement and mediation for e-commerce, etc. Operators have actually benefitted from OTT services as they continue to drive customers to subscribe to broadband services. The issue is to drive the pricing strategy of an operator to be more on data rather than voice, which is already taking place in more mature markets. So, the challenge is to price services in a more innovative fashion that ensures revenues are generated in a way that guarantees investments in the network.

To what extent will the blending of IT and telecoms into a more fully integrated ICT sector impact the structure and strategies of telecoms operators?

BIYARI: The evolution and convergence of technologies have blurred the lines that separated telecoms players from the world of IT. Telcos and IT organisations are vying for control of their new ICT intersection. Understanding the markets and the trends that shape them will help telcos take full advantage of the market share and revenue opportunities. Many telcos are trying to move beyond voice and data services. They are building their capability through organic and inorganic means. Several telcos have acquired IT firms in order to drive growth in ICT services and related network areas. The convergence is not a one-way street. Some IT players are recognising that they have the capability to make inroads into the telecoms space by designing substitutes for traditionally delivered telecoms services such as OTT application collaboration and IP-based communication application. Telcos have to select carefully how they should make their ICT play and strategise to provide their customers with value-added ICT services while protecting their traditional services.