In this article, I will discuss the global telecommunications sector and specifically telecom companies, their finances, what they need to do to continue, and what can be done to ensure their sustainability. I will divide the article into a series of stages: the past, present, and future.
The past: In the 1990s, telecommunications companies experienced their peak growth, with most of their revenue coming from the individual sector, which included phone calls, text messages, internet packages (or data), and the distribution of mobile devices and content. The business sector, which provided services to companies and government entities, was relatively less lucrative. However, the rules of the game changed.
The present: By the beginning of the millennium, telecommunications companies had reached their peak, expanding their reach to cover 50% to 70% of the population. However, at the same time, new players entered the market, such as messaging apps and internet companies like WhatsApp, Facebook, Google, and Apple. These companies took market share away from telecommunications companies globally as customers turned to these free and more widely used applications. For example, Facebook is like a telecommunications company with nearly 2 billion users who can use its messaging and voice and video calling services for free to communicate with each other worldwide. As a result, the use of traditional telecommunications calls and messaging declined significantly, to the point where the revenue of telecommunications companies was limited to selling internet packages. With the increasing use of the internet and video platforms such as YouTube that consume high bandwidth, another significant challenge emerged, where network usage costs increased, eating into telecommunications companies' revenues. On the other hand, telecommunications companies had no choice but to lower their prices to gain more customers, further straining their finances. Consequently, there has been a noticeable decrease in the revenues of most telecommunications companies worldwide in the last three years.
At the turn of the millennium, some telecommunications companies sensed danger and worked on defensive plans such as restructuring their operations, like outsourcing customer service departments to external companies to reduce costs and financial burdens. Also, the sales department.
The future:
One day, I visited a start-up in San Francisco specializing in providing AI to reduce the number of customer service employees in companies by 90%. This means that out of 100 employees, you can rely on 10 employees and AI, and lay off 90 employees!! This is just the beginning. Also, among the defensive solutions is the merger with other telecommunications companies to reduce operating costs.
One of the offensive plans is to use data analysis and establish departments in the field of Data Science to study customer segmentation and convert it into sellable information for the retail, banking, and transportation sectors, where they are interested in this information to provide their services better and closer to individuals.
Another proposal is to work on owning global technologies and innovations.
Also, one of the offensive plans is to establish companies in the field of content, media, and entertainment, or to partner with them or acquire them, such as what happened between AT&T and Time Warner, where the deal was valued at $100 billion. Where Time Warner works in the field of media and content, as it owns satellite stations and channels, in addition to working on broadcasting content such as news and visual production. As a result, AT&T strengthened its revenues in the field of advertising and also provided content services to its customers through subscription packages.
Similarly, Verizon Communications worked on acquiring Yahoo to boost its revenues.
Also, one of the offensive plans is to turn telecommunications companies into investment companies in the telecommunications and technology sector, such as SoftBank, and thus own technologies that can spread globally. Where SoftBank invests in companies that manufacture electronic chips, as well as Uber and Alibaba. Their investment in the Chinese company Alibaba is one of the most successful investments, as they achieved a return of $60 billion from an investment of $20 million!! A deal of its kind.
The truth is that the story is not over yet. I claim that in the coming years, telecommunications companies will be completely overtaken as they will have competitors in offering internet packages, which are currently their main source of income. Google has launched internet packages with a mobile number in the past two years, so you can subscribe to them and use them anywhere in the world, not to mention their investments in developing technologies and satellites to provide affordable internet to as many people as possible, with the goal of reaching 7 billion people. Facebook also has initiatives in this field, and there are other companies working on developing technologies for broadcasting the internet globally. This will generally expose telecommunications companies to bankruptcy if they do not work on defensive and offensive plans quickly, develop their strategic plans, and attract talent to accelerate the development process.
