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Major themes shaping the 2022 agenda for telecom players

The year 2022 has been widely referred to as a year of recovery and growth, with important economic sectors predicted to improve following the economic slump. We hope that this year will bring better opportunities for the telecommunication sector as well. Last year was yet another disruptive year and many telecom companies were urged to reevaluate their business strategies. This year will definitively be the year when we will see telcos coming back into full swing.

Let us look at the three major themes shaping the telco agenda in 2022:

Returning to value growth
Telcos are expected to shift their focus more on creating, capturing, and returning more value to their shareholders. We have seen several deals close in the telecom space in the previous year, and the pace is not anticipated to slow down this year. M&A is crucial for many players to diversify into adjacent areas and expand their portfolios. This M&A boom is likely to change the landscape in several telco markets, driving consolidation and some scale. However, while implementing deals, there is a lot that telecom providers need to get right with respect to the integration of new businesses and technologies.

Since 5G is expected to be a major driver of new growth value, with telcos investing in 5G networks and services at an unprecedented rate, we believe that 5G will create new opportunities for businesses helping them drive innovation and efficiency.

We also expect many telecom companies’ business divisions to witness revenue growth return, with greater concentration on IT services.

However, telcos must continue to develop capabilities in this segment if they want to fully capitalize on the growing demand of their clients for digital transformation.

Accelerating digital transformation
A huge transformational push will drive fitter and better-performing business models this year. Digital transformation has been a focal point for telecom majors for some time now, but 2022 is when we truly anticipate reaching critical magnitude.

According to Analysys Mason, telecom companies are supposed to spend a cumulative USD 990 billion in CapEx for 5G between 2020 and 2027; many are hoping for this modern technology. Essentially, 5G is not a proposition, nor it is a business model; it is just a network technology or primarily an enabler. A big transformational push is required for telcos, combined with far higher levels of automation and better customer offerings – all of which must be backed by solid data foundations.

This is where digital transformation comes in. To deal with altering customer requirements and tap into new business opportunities, telecom companies need to modify how they operate and shed substantial amounts of technical debt.

They will also have to reconsider their internal structures to level this kind of change. Many telecommunications enterprises have already adopted agile policies for at least some components of their operations. The telecom major Airtel has recently announced to simplify its existing ERP financial and SCM processes to upgrade them with the power of AI/ML through OCI.

Focus on environmental impact and sustainability
The telecom industry has always been a substantial part of the infrastructure that underpins societies, but this year they will need to become more involved with societal and environmental causes.

When it comes to the environment, telcos energy usage has come under scrutiny as the issue of carbon footprints gained public attention.

Many companies have already set up goals to reduce their carbon emissions, and a key step now is to eliminate ambiguity and greenwashing in their reporting. We believe that telcos also have opportunity to look at ways to help society become more focused on sustainability.

Looking ahead
In a nutshell this year, telcos must focus on resuming value development, speeding digital transformation, and taking society and the environment seriously. Companies can turn these three areas into a virtuous cycle. New opportunities for organic as well as inorganic growth will be more easily realized and further enhanced by an ESG agenda.

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