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VoIP revolution threatens telecom firms
2007-01-17
New analysis from Gartner has revealed that telecoms firms face risks from building non-core telecom business units and over-investing in immature technologies while future profit margins will be lower.
The report predicts that year-on-year revenue from telecom services - currently 80 per cent of the total global market- will fall to 1.3 per cent in 2010.
As a result telecom firms are expected to focus their attentions and investment in new areas, such as IT and media. For example Telecom Italia has recently tried to transform itself into a media company, BT Global Services and HP have teamed up for integrated IT services and SK Telecoms has acquired Korea's largest music recording label.
However, Gartner predicts that half of these new businesses will fail as "many carriers have a limited knowledge of their existing subscriber base and often don't understand the new business models".
Martin Gutberlet, research vice president at Gartner, said: "The synergies between the different business models and markets are very limited. This type of diversification carries a high risk of losing focus on today's core business priorities such as customer retention and cost cutting, with no guarantee of increased revenue growth in the long-term."
He added: "It will take more than just hiring a few media or IT executives for carriers to succeed in these new markets."
The report suggests that telecom firms should focus more protecting their core services.
Gartner analyst Nick Jones said: "The first option is to improve network access activity and become a pure connectivity provider. Carriers looking to safeguard their (albeit slimmer) profits could do a great deal worse than becoming a really excellent bit-pipe. There will be steady returns for those who focus on reducing costs and increasing efficiency."
He also pointed towards telecoms offering more complex bundles of products - including a mix of mobile, broadband, VoIP, entertainment services - in future and warned that customers to "evaluate carefully" the value of commercial bundles to avoid buying extra unnecessary services.
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