#4 – Demise of the group operator concept, rise of the lean and local models


Summary: In 2014, it will become apparent that operators with lean organisations and a strategic focus supported by efficient long-term partners will define operational model best practice. Just as low-cost airlines have been transforming the airline industry with their lean and cost-efficient business model, with national/government airlines taking note and attempting to follow suit; the telecom industry will start to see similar trends next year.


Seeking scale via group and cross-border operator has not really been successful. In many cases in Europe where a group operator’s performance (financial and operational KPIs) is compared to that of operators with a focus on local efficiencies, the group operators do not outperform the local competitors. It is the local market conditions that determine performance rather than scale. This is mainly because the costs group operators incur from having to modify their offerings and operations in each market often erodes the scale benefits. Also, the size coupled with the legacy attached to many group operator organizations make it harder for them to be cost-efficient and agile in a constantly evolving and competitive market.

More significant benefits are being found when operators optimize CAPEX and OPEX at the Opco level rather than at the group level. The operators doing that are the smaller, often newer, more local players, that have a small operational core and are running operations on cost-efficient principles. Research shows that these European operators with lean and agile organisations have shown a greater ability to swiftly respond and adapt to market changes.

In the bid to remain competitive, operators will increasingly be required to strengthen their focus on strategic management, i.e. the brains of the business, and emphasis on partnerships with service providers for execution and operation of the operational functions. The lean operational model will become the benchmark for the telecom market, and operators of all kinds will start to apply such principles to their organization.

Adopting such a lean model will not be an easy task, especially for incumbent operators. The drive to do so rarely comes from within, but rather originates from the pressure of external factors; or owners such as private equity firms that see the merit in reaching their investment goals through such an operational model.

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#5 - WiFi edges mobile in connected devices

Growth in connected device numbers will continue to accelerate, particularly in M2M applications, but in 2014 most of the growth will depend on Wi-Fi connections rather than mobile. Now that the most valuable applications for connectivity have been deployed, the high costs and complexity connecting devices over mobile will push the next use cases to Wi-Fi.
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