Report outlines EUR 200bn digital transformation opportunity for telecoms sector

Arthur D. Little (ADL) has published a new research report highlighting the need for greater digitalization in the global telecoms industry, the company said.

The TIME 2018 Flagship Report outlines the scale of the digital opportunity, with analysis estimating that a ´digital dividend´ of over EUR 200 billion free cash flow awaits telcos that can successfully transform.

Industry executives surveyed for the report confirm the findings. 73% say that digital will add value to their businesses, with key benefits including greater agility, increased subscriber growth and cost savings.

CAPEX spending on areas such as 5G infrastructure and the Internet of Things is expected to require a 7% CAGR increase from 2017-2022, outpacing forecast revenue growth. Consequently, failing to digitally transform risks commoditization and disintermediation, leaving telcos unable to invest sufficiently. As one senior executive put it bluntly, “Digitalization — there is no other choice if we want to survive.”

The report highlights that acting now is vital if telcos want to guarantee future success. However, becoming digital will require a substantial shift, focusing on two key areas:

Enabling digital — investing appropriately to become more digitally mature
Embracing digital — making significant structural changes to organizational design and corporate culture as well as how they do business, attract talent and develop the right skills
Currently the majority of telcos are still at an early stage of digital maturity — 33% see themselves at the “digital basic” stage, with just 3% at the most advanced “digital expansion” level.