shareholder value for telcos
DESCRIPTION
Telco 2.0 MD Chris Barraclough's presentation at the 7th Telco 2.0 Executive BrainstormTRANSCRIPT
Rebuilding value & control via a 2-sided business modelChris Barraclough, MD, STL Partners/Telco 2.0
Agenda
• What is a business model?
• Problems with Telco 1.0 business model
• New opportunity: Telco 2.0
A business model is the COMMERCIAL architecture of a business: how it makes (or loses) money
Source: Faber et al; Designing business models for mobile ICT services, 2001; adapted and developed by STL PartnersNote: Each domain breaks down into several inter-related components that make up the overall business model.
Service Offering
Finance
Value NetworkTechnology
The marketplace
A 5-domain model
The success of a company’s (or collection of companies’) business model is ultimately a function of two factors
Value Control+
• Low/no growth in end user revenues
• More companies sharing revenues and generating costs
• More substitute products
• Unable to match free
Telco 1.0 business model is now under pressure in several domains
Source: Ballon 2007; STL Partners analysis
• More modular technology
• Decentralised network intelligence
• More punitive regulation
Value Network Technology
Control Drivers
Service OfferingFinance
Value Drivers
The Marketplace
Control & Value Drivers
• Less vertical integration
• Weaker customer relationships
Sexy new services paid for by end user will NOT yield continued revenue and profit growth
Short term revenue growth only +
Medium term capacity & cost issues =
Falling margins, lower profits…
Pre-2005• Retailer of books and games
Now• Retailer + platform (Amazon Marketplace)
Amazon – retailer-cum-platform provider
Pre-2005• Retailer of books and games
• 52,000 SKUs
Now• Retailer + platform (Amazon Marketplace)
• 100,000s of SKUs
Amazon – retailer-cum-platform provider
Pre-2005• Retailer of books and games
• 52,000 SKUs
• Revenue from end user sales
Now• Retailer + platform (Amazon Marketplace)
• 100,000s of SKUs
• New revenue from enabling services to traders
Amazon – retailer-cum-platform provider
Pre-2005• Retailer of books and games
• 52,000 SKUs
• Revenue from end user sales
• Profitable but margin squeeze
Now• Retailer + platform (Amazon Marketplace)
• 100,000s of SKUs
• New revenue from enabling services to traders
• Profit underpinned by platform
Amazon – retailer-cum-platform provider
Pre-2005• Retailer of books and games
• 52,000 SKUs
• Revenue from end user sales
• Profitable
• Best-in-class logistics
Now• Retailer + platform (Amazon Marketplace)
• 100,000s of SKUs
• New revenue from enabling services to traders
• Profit underpinned by platform
• Improved, lower cost logistics (more scale)
Amazon – retailer-cum-platform provider
Pre-2005• Retailer of books and games
• 52,000 SKUs
• Revenue from end user sales
• Profitable
• Best-in-class logistics
• Big consumer base, strong relationships:• E.g. peer reviews
Now• Retailer + platform (Amazon Marketplace)
• 100,000s of SKUs
• New revenue from enabling services to traders
• Profit underpinned by platform
• Improved, lower cost logistics (more scale)
• More customers, stronger relationships:• E.g. Premium logistics – Amazon Prime
Amazon – retailer-cum-platform provider
A new telecoms business model
$ $
Source: STL Partners Analysis
• New revenue source from upstream customers
• Services more complementary
• End-users add value to platform
• More customer intimacy
A successful Telco 2.0 business model restores elements of value and control to the Telco industry
• Single platform for multiple industries
• Operator remains gateway to end users
• Centralised intelligence – resides in platform
• Unclear – potentially a move into less regulated markets
?
Source: Ballon 2007; STL Partners analysis
Value Network Technology
Control Drivers
Service OfferingFinance
Value Drivers
The Marketplace
Control & Value Drivers
Three things required to bring Telco 2.0 to fruition
Leadership
Skills
CollaborationMY CONTEXT
Location Presence
On/OffRoaming
MY CREDIT
Bad debt Demographics
Average balance
MY PERSONAL DATA
MY CONTENTMY IDENTIFIERS
MY INTERACTIONS
MY RELATIONSHIPS
MY DEVICES
Name
Address Gender
ProfilePreferences
SIM SoftSIM
Serial NumberDevice details
Number SIP Number
IP Address
Pictures Videos
CalendarAddress Book
Bank School
FriendsWorkplace
Browsing History
.mobi domains QR Codes
Source: STL Partners analysis
$375 billion opportunity (not guaranteed!)
2007 2017
VAS Platform
Distribution Platform
Telco Retail Platform (& existing Wholesale)
$1,230bn
$689bn
EU-27 and North American Telecoms
Source: STL Partners, Telecoms Two-Sided Business Model Opportunity and Future Broadband Business Models, both published in 2008
Thank You
More at www.telco2.net